The IRDAI and Insurance Law updates provides synopsis of the introduction, amendments and changes brought by the Government and IRDAI in the previous quarter ended on (31st March 2021) is being published in this bulletin.

1. IRDAI has issued Circular No. IRDA/ACT/CIR/MISC/001/01/2021 dated 1st January,2021 for providing clarification on IRDAI(Assets, Liabilities and Solvency Margin of Life Insurance Business ) Regulations,2016 and IRDA( Assets, Liabilities and Solvency Margin of General Insurance Business ) Regulations, 2016.

2. IRDAI has issued Notification no. IRDAI/RI/172/2020, dated 4th January 2021 on “Obligatory Cession for Financial Year 2021-22”.

3. IRDAI has issued Guidelines Ref No. IRDAI/NL/GDL/MISC/006/01/2021, dated 4th January 2021 on “De-notification of all India Fire Tariff (AIFT),2001 for certain risks and introduction of standard products and guidelines for Dwellings, Micro and Small Business.

4. IRDAI has issued Press Release, dated 4th January 2021 on “Introduction of new standard products covering Fire & Allied perils for certain risks.

5. IRDAI has issued Circular No. IRDAI/F&I/CIR/INV/008/01/2021 dated 5th January,2021 on Credit Rating-Applicable for Infrastructure Investments.

6. IRDAI has issued Circular No. IRDAI/HLT/REG/CIR/011/01/2021 dated 13th January,2021 for “Communication on settlement of health insurance claims against General Insurance Council’s instructions dated 20th June 2020 on “Reference Rates for COVID-19”.

7. IRDAI has issued Circular No. IRDAI/SDD/CIR/MISC/016/01/2021 dated 25th January,2021 for informing all ensures that Central KYC Registry (CKYCR) has been operationalized.

8. IRDAI has issued Order No. IRDAI/NL/ORD/MISC/21/01/2021 dated 29th January,2021 imposing penalty and advisory on M/s. GO DIGIT General Insurance Limited.

9. IRDAI has through Circular No. IRDA/HLT/REG/CIR/25/02/2021 dated 3rd February ,2021 issued Guidelines on Standard Vector Borne Disease Health Policy.

10. IRDAI has through Circular No. IRDA/HLT/REG/CIR/29/02/2021 dated 8th February ,2021 issued Modified Guidelines on Product Filing in Health Insurance Business.

11. IRDAI through Circular No. IRDAI/INT/CIR/DGLKR/030/02/2021 dated 9th February,2021 requested to all Insurers for Issuance of Digital Insurance Policies by Insurance Companies via Digilocker.

12. IRDAI through Circular No. IRDA/CIR/MISC/031/02/2021 dated 11th February,2021 issued Product Structure for Insurance of Remotely Piloted Aircraft System( RPAS) /Drones.

13. IRDAI through Circular No. IRDA/F&A/CIR/MISC/032/02/2021 dated 25th February,2021 advised all insurers for Prudent Management of Financial Resources of Insurers in the context of COVID-19 Pandemic.

14. IRDAI has issued Guidelines on Standard Personal Accident Insurance Products through Circular No. IRDA/HLT/GDL/MISC/036/02/2021 dated 25th February,2021.

15. IRDAI through Circular No. IRDAI/HLT/REG/CIR/038/2021 dated 01/03/2021 instructed to all General and Health Insurers the communications on basis information on health insurance policies to Policyholders.

16. IRDAI through Circular No. IRDAI/NL/CIR/MISC/033/2021 dated 02/03/2021 asked Non-Life Insurers to submit Rural Insurance Business data for last three financial years in new formats.

17. IRDAI through Circular No. IRDAI/Life/MISC/CIR/046/03/2021 dated 11/03/2021 clarified doubts of insurers related to ASHA Workers and MANREGA Workers.

18. IRDAI through Circular No. IRDAI/HLT/REG/CIR/049/03/2021 dated 16/03/2021 issued Modified Guidelines on product filing in health insurance business.

19. IRDAI through Circular No. IRDAI/HLT/CIR/MISC/053/03/2021 dated 19/03/2021 and asked Life/Non-Life/Health Insurers to establish clear and transparent Claim Settlement Procedures.

20. IRDAI through Circular No. IRDAI/HLT/REG/CIR/058/03/2021 dated 23/03/2021 issued Modification of Guidelines on Standard Personal Accident Insurance Product.

21. IRDAI through Circular No. IRDAI/Life/CIR/MISC/056/03/2021 dated 23/03/2021 allowed exemption for 6(six) months for issuance of Insurance Policies under e-signature.

22. IRDAI has issued Press Release dated 24/03/2021 for extension of time “Corona Rakshak & Corona Kavach Policies.”

23. IRDAI has through Circular No. IRDAI/HLT/REG/CIR/061/03/2021 dated 24/03/2021 extend timelines for sale of Short Term Covid Specific Health Insurance Policies.

24. IRDAI has through Circular No. IRDAI/HLT/REG/CIR/064/03/2021 dated 24/03/2021 issued instructions to all insurers related to (a) Issuance of Electronic Policies and (b) Dispensing with Physical Documents and Wet Signature on the Proposal Form.

25. IRDAI through Circular No. IRDAI/IT/CIR/MISC/063/03/2021 dated 24/03/2021 instructed all insurers to register their templates with TRAI before 05/04/2021 for soliciting prospecting customers.

26. IRDAI through Press Release dated 25/03/2021 notified Insurance Amendment Act, 2021.

27. IRDAI through Press Release dated 31/03/2021 announced launch of three Standard Products on Fire and Allied Perils Insurance Business.

28. IRDAI through Circular No. IRDAI/F&I/CIR/INV/065/03/2021 dated 31/03/2021 issued Dividend Criteria for Equity Investment under “ Approved Investment”.IRDAI Regulatory Updates –For Quarter Ended 31st March 2021

Clarification on IRDAI( Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016

In exercise of the power vested under Regulation 11 of the IRDAI (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016, the following clarifications are issued:

a) For the purpose of Regulation 9 of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016 and Regulation 9 of the IRDAI (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016, it is clarified that the Appointed Actuary will be intimated well in advance through a communication to be sent by an officer of the Authority not below the rank of Deputy General Manager about the reasons for seeking his/her personal visit to the Authority.

b) This circular comes into force with immediate effect.

Obligatory Cession for Financial Year 2020-21

IRDAI has issued Notification no. IRDAI/RI/172/2020, dated 4th January 2021 on “ Obligatory Cession for Financial Year 2021-22.

Applicability: This notification shall be applicable to Indian Re-insurers and other applicable insurers as per the provisions of Section 101A of the Insurance Act, 1938.

Percentage of Cession: The percentage cession of the sum insured on each General Insurance Policy to be reinsured with the Indian Re-insurer(s) shall be 5% (five percent) in respect of insurance attaching during the financial year beginning from 1st April 2021 to 31st March 2022, except the terrorism premium and premium ceded to Nuclear Pool, wherein it would be made ‘NIL’. The entire Obligatory Cession is to be placed with General Insurance Corporation of India (GIC Re) only.

Terms & Conditions:

a) Notice of information on cession:

i) There would be no limit on sum insured applicable for the cessions made during the period from 1st April 2021 to 31st March 2022.

ii) In view of the above, the Indian Re-insurer may require the ceding insurer to give immediate notice of underwriting information of any cession exceeding an amount as specified by the former. The ceding insurer shall inform the Indian Re-insurer at all times whenever the cession exceeds such specified limits.

b) Commission: Percentage of commission on obligatory cession for different classes of business shall be as follows:

i) Minimum 5% for Motor TP and Oil & Energy insurance.

ii) Minimum 10% for Group Health insurance.

iii) Minimum 7.50% for Crop Insurance.

iv) Average Terms for Aviation insurance.

v) Minimum 15% for all other classes of insurance business. Commission over and above, can be as mutually agreed between Indian Re-insurer(s) and the ceding insurer.

c) Profit Commission: The Indian Re-insurer shall share the profit commission, on 50%:50% basis, with the ceding insurer based on the performance and surplus of the total obligatory portfolio of the ceding insurer, after factoring the following:

i) Incurred loss % (to be worked at the end of 3 financial years).

ii) Management Expenses at 2%.

iii) Profit at 5%.

iv) Commission at 15%.

v) Loss ratio at 50% to 78%. No profit commission is payable if the loss ratio exceeds 78%. Profit commission shall not exceed 14%.

De-notification of all India Fire Tariff( AIFT) ,2001 for certain risks and introduction of Standard Products and Guidelines for Dwellings , Micro and Small Business.

  • A working group of insurance regulator IRDAI, that revisited the structure of products providing cover to homes, offices, commercial establishments and MSMEs, has recommended many changes, from simplification of the policy wordings and provision of adequate cover to insuring homes in multi-storeyed apartments for total saleable price.IRDAI has issued Guidelines Ref No. IRDAI/NL/GDL/MISC/006/01/2021, dated 4th January 2021 on “De-notification of all India Fire Tariff(AIFT),2001 for certain risks and introduction of standard products and guidelines for Dwellings, Micro and Small Business.:
  • The Insurance Regulatory and Development Authority of India (IRDAI) said wordings and terms and conditions of the basic policy for fire and allied perils for all categories of risks are driven by the erstwhile All India Fire Tariff, 2001. Insurers, however, have been permitted to sell add-ons to the basic cover. IRDAI had set up the group in view of the huge gap between economic losses and insured losses, post catastrophic events, for homes, offices, commercial establishments and MSMEs. The group submitted its second and last part of the report in November.
  • Noting that the protection needs of the insuring public for their assets against fire and allied risks are met by Standard Fire and Special Perils Policy (SFSP), the group said the product structure remained, more or less, the same since the All-India Fire Tariff revision in 1988. “Though the tariff has undergone several changes since then, the last in 2001, these changes were more in the rules of underwriting and premium rates rather than in the basic structure, coverage and terms of insurance or the claims settlement processes.”
  • Noting the product, created years ago, does not seem to be meeting the true protection needs of the insuring public, the group recommended introduction of three different versions of the product as a measure to address the present practice of same product being sold to large commercial customers as well as homes and small shops.
  • The first, and the simplest of the three with most relaxed terms, would be for homeowners while a slightly more refined version would be for micro commercial establishments having value at risk of up to ₹5 crore. A moderated version of the existing product is recommended for commercial risks having value at risk from ₹5 crore to ₹50 crore.
  • The group also recommended coverage of all perils in the base product itself to “avoid mis-selling and inadequate coverage for unsuspecting public. Now, many perils do not form part of the base product and are sold as add-on/riders on customer demand or sales push. “For example, earthquake, which has caused large scale economic losses in different parts of the country in recent past, is not a default cover in fire insurance but has to be opted by express demand,” the report said.
  • The group said there has to be a system of default sum insured for all the dwellings such that the insured value is a reasonable estimation of the correct value of construction cost of the building. Towards this, it wanted the General Insurance Council or the IIB (Insurance Information Bureau) to create a database of cost of construction for each square feet of carpet area for different geographies and construction types. The insured would declare only the carpet area and the sum insured of the dwelling shall be auto calculated at the given rate. Likewise, insurance of apartments in multistoried building should be for total saleable price of the unit based on rates published by the State government concerned. Policyholder will have the option to increase this rate if the actual rate is higher than ready reckoner, but not reduce below it. “In case of a total loss, per square foot rate specified in the policy shall be sacrosanct and claim shall be paid after multiplying it with the actual area of the apartment,” the report said.

Introduction of new Standard Products covering Fire & Allied Perils for certain risks.

IRDAI has issued Press Release, dated 4th January 2021 on “Introduction of new standard products covering Fire & Allied perils for certain risks.:

The Insurance Regulatory and Development Authority of India (IRDAI) on January 04, 2021 has issued a press release for the introduction of new standards product covering fire and allied perils of certain risks. The Authorities have decided that now the process of de-tariffing for the risks of Dwellings and micro level and small level enterprises from April 01, 2021 shall stand de-notified from the effective date and replaced by relevant Guidelines.

Authority has now issued guidelines whereby the Standard Fire and Special Perils (SFSP) Policy provided for in the erstwhile AIFT 2001 will be replaced by the following standard products that shall be mandatorily offered by all general insurers carrying on Fire and allied perils insurance business with effect from April 01, 2021.

The following products have been included:

  • Bharat Griha Raksha (meant for Home Building and Home Contents)
  • Bharat Sookshma Udyam Suraksha (meant for enterprises where the total value at risk is up to Rs. 5 Crore).
  • Bharat Laghu Udyam Suraksha (meant for enterprises where the total value at risk is more than Rs. 5 Crore and up to Rs. 50 crore).

Credit Rating -Applicable for Infrastructure Investments.

IRDAI has issued Circular No. IRDAI/F&I/CIR/INV/008/01/2021 dated 5th January,2021 on” Credit Rating-Applicable for Infrastructure Investments.

The Authority directs Insurers to classify Infrastructure investments, issued by Infrastructure Companies, rated not less than “A” along with an Expected Loss Rating of “EL1” as part of “Approved Investment” and should be listed under Category Code “IELB” as per Category of Investment under Master Circular – Investments.

Further, any downgrade of Infrastructure Investment, below “A” or “EL1”, needs to be re-classified as part of “Other Investments” and reported under Category Code “IOEL” as per Category of Investment under Master Circular – Investments. The valuation of the above investments shall be valued “either as per FIMMDA or at applicable market yield rates published by any Rating Agency registered with SEBI”.

Communication on settlement of health insurance claims against General Insurance Council’s instructions dated 20th June 2020 on “Reference Rates for COVID-19”.

IRDAI has issued Circular No. IRDAI/HLT/REG/CIR/011/01/2021 dated 13th January,2021 for “Communication on settlement of health insurance claims against General Insurance Council’s instructions dated 20th June 2020 on “Reference Rates for COVID-19”.

  • In the communication to the insurers, IRDAI has stated that in case of ‘Cashless Claims’ under a health insurance policy, the claims shall be settled as per the tariff decided by the parties as per the provisions of Regulation 31 of IRDAI (Health Insurance) Regulations, 2016.
  • However, the insurers shall make efforts to have an agreement with health providers on rates for treatment of Covid-19 similar to other diseases for which rate agreements are in place.
  • Also, while entering into such agreements, the reference rate of General Insurance council can be kept in view for guidance along with rates fixed by State Governments and Union Territory administration, if any and as relevant.
  • Further, all the insurers have been directed by IRDAI to ensure that the ‘Reimbursement claims’ under a health insurance policy shall be settled as per the terms and conditions of the respective policy contract.
  • The Reference Rates for COVID-19 of GI Council will be applicable to both cashless and reimbursement Covid-19 claims where any Government Authority has not published standard charges for Covid-19 treatment. Wherever Covid-19 treatment charges have been published by any Government Authority, those charges shall be applicable to insurance claims with member companies.

Operationalization of Central KYC Registry (CKYCR).

IRDAI has issued Circular No. IRDAI/SDD/CIR/MISC/016/01/2021 dated 25th January,2021 for informing all insures that Central KYC Registry (CKYCR) has been operationalized.

  • Reference is drawn to the circular of the Authority relating to Operationalization of Central KYC Registry (CKYCR) dated July 12, 2016 through which Reporting entities (REs) were advised to upload the KYC data pertaining to all individual accounts on to CKYCR in terms of the provisions of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Changes to the template, as and when required are released by CERSAI.
  • As the CKYCR is now fully operational for individual customers, it has been decided to extend the CKYCR to Legal Entities (LEs). Accordingly, REs shall upload the KYC data pertaining to accounts of LEs opened on or after April 1, 2021, on to CKYCR in terms of Rule 9 (1A) of the PML Rules.

Penalty Order on M/s. GO DIGIT General Insurance Limited

IRDAI has issued Order No. IRDAI/NL/ORD/MISC/21/01/2021 dated 29th January,2021 imposing penalty and advisory on M/s. GO DIGIT General Insurance Limited on below mentioned points.

Charge 1: Violation of Para 6 of corporate governance guidelines – The insurer has failed to ensure that the risk is assumed after the receipt of premium and the MISP deposits the premium within twenty-four hours of its collection.

Decision: Penalty of Rs. 5.00 Lakhs imposed and advisory issued.

Charge 2: Violation of Para 23 of IRDA (Registration of Indian Insurance Companies) Regulations, 2000; Regulation 16 of IRDAI (Insurance Surveyors and Loss Assessors) Regulations, 2015 and Para 14(d) of MISP guidelines – The insurer is using clauses/ terms in Standard Operating Procedure (SOP) related to processing of motor insurance claims which are against the interest of policyholders. Also, the insurer has not sent initial assessment of loss or final settlement letter to the policyholder.

Decision: Advisory issued to refrain from incorporating such clauses in the SOP and share estimate/settlement details to direct policyholder.

Guidelines on Standard Vector Borne Disease Health Policy.

In order to convince public for getting health insurance coverage to specified Vector-Borne Diseases, the Insurance Regulatory and Development Authority of India (IRDAI) has encouraged all general and health insurers to offer Standard Vector-Borne Disease health policy. This health policy can preferably be available by 1 April 2021.

Vector-borne diseases generally happen from an infection transmitted to humans and other animals by blood-feeding insects like mosquitoes, ticks, etc. For instance, vector-borne diseases can include Dengue fever, Malaria, etc.

According to the IRDAI guidelines issued on 3 February 2021, “The Standard health policy shall have coverage as specified in these Guidelines which shall be uniform across all General and Health Insurers. The policy shall be offered both on individual and floater sum insured basis.” Also, the tenure of the policy will be one year. You will be required to pay premium via single premium mode only.

Policy framework

The minimum sum insured under Standard Product shall be ₹10,000 wherein the amount can be increased in the multiples of ₹10,0000 and maximum limit can go up to ₹2 lakh. Besides, the minimum entry age shall be 18 years for principal insured and maximum age at entry shall not be less than 65 years for all the insured members including principal insured.

As per the release, the nomenclature of the product shall be the name of the insurance company followed by “Mashak Rakshak”. No other name is allowed in any of the documents. The insurer shall also endeavour to mention the meaning of “Mashak” in vernacular i.e., Mashak (Meaning in vernacular) depending on the region where policy is sold. Wherever English is used for promoting the product, the name of the product shall be “Mashak (Mosquito) Rakshak”.

Policy coverage

The Standard Product shall offer the following:

1. Hospitalization Benefit:Lump sum benefit equal to 100% of the Sum Insured (excluding the amount paid under-diagnosis cover) shall be payable on a positive diagnosis of any of the following vector-borne disease (s) requiring hospitalization for a minimum continuous period of 72 hours. The diseases include Dengue fever, Malaria, Filaria (Lymphatic Filariasis), Chikungunya, Japanese Encephalitis and Zika Virus.

2. Diagnosis Cover:2% of the sum insured shall be payable on positive diagnosis (through laboratory examination and confirmed by the medical practitioner) of every covered vector-borne disease on the first diagnosis during the Cover Period, subject to policy terms and conditions. The Policyholder is entitled to payments under “diagnosis cover” payment for each disease only once in the policy year, the IRDAI guidelines said.

On payment of 100% of sum insured the policy shall be terminated. In case where a policy is issued to a family with an individual sum insured for each member, the policy will continue for the rest of the members, the IRDAI guidelines said.

Modified Guidelines on Product Filing in Health Insurance Business.

The Insurance Regulatory and Development Authority of India (IRDAI) has modified guidelines on product filing in health insurance business on proportionate deductions.

As per modified guidelines, “Whereas part of product design insurers propose proportionate deduction of the ‘associated medical expenses’ when a policyholder chooses a higher room category than the category that is eligible as per terms and conditions of the policy, insurers shall define ‘associate medical expenses’ in the terms and conditions of policy contract.”

The following expenses such as cost of pharmacy and consumables, cost of implants as medical devices and cost of diagnostics are not allowed to be part of the definition of ‘associate medical expenses’.

The guidelines stated that insurers shall not recover any expenses towards proportionate deductions other than the defined ‘associate medical expenses’ while processing claims.

Insurers shall ensure that proportionate deductions are not applied in respect of the hospitals which do not follow differential billing or for those expenses in respect of which differential billing is not adopted based on the room category. This shall be clearly specified in the policy terms and conditions.

Insurers are not permitted to apply proportionate deduction for ‘ICU charges’ as different categories of ICU are not there, the guidelines stated.

The provisions of these guidelines shall be applicable to the Health Insurance products filed as per guidelines on product filing in health insurance business on or after 1st October 2020.

All policy contracts of the existing health insurance products that are not in compliance with these guidelines shall be modified as and when they are due for renewal from 1st April 2021 onwards.

“Insurer shall modify the policy wordings of the existing health insurance products without any change in UIN to comply with these guidelines,” as per modified guidelines.

Issuance of Digital Insurance Policies by Insurance Companies via Digi locker.

IRDAI has asked insurers to issue digital policies to their policyholders and also tell them how to use these documents.

The regulator has reasoned that the step will not only bring down the cost but also help speed up claim settlement process.

In its circular issued to all insurers excluding GIC Re, Lloyd’s (India) and FRBs (foreign re-insurance branches), IRDAI said that Digilocker will drive reduction in costs, elimination of customer complaints relating to non-delivery of policy copy, improved turnaround time of insurance services, faster claims processing and settlement, reduction in disputes, reduction in fraud and improvement in customer contractability.

On the whole it is expected that it will lead to better customer experience, said the Insurance Regulatory and Development Authority of India (IRDAI).In o

rder to promote the adoption of Digilocker in the insurance sector, the Authority advises all insurers to enable their IT systems to interact with Digilocker facility to enable policyholders to use Digilocker for preserving all their policy documents.

The insurers should inform their retail policyholders about Digilocker and how to use it. Insurers are also advised to enable the process by which the policyholders can place their policies in the digilocker, said the regulator.

As per the circular, the Digilocker team in NeGD (National e-Governance Division) under Ministry of Electronics and Information Technology will provide necessary technical guidance and logistic support to facilitate adoption of Digilocker.

Digilocker is an initiative under the Digital India programme by the government where citizens can get authentic documents/ certificate in digital format from original issuers of these certificates.

It aims at eliminating or minimising the use of physical documents and will enhance effectiveness of service delivery, making these hassle free and friendly for the citizens.

Product Structure for Insurance of Remotely Piloted Aircraft System(RPAS)/Drones.

Insurance Regulatory and Development Authority of India (IRDAI) has introduced a product structure for customised insurance cover for drones and urging insurers to respond to the new and quickly growing market.

Considering the unique characteristics of drones that differentiate them from other aircraft and taking into account the phenomenal growth in the usage of drones for multiple purposes, there is a need to augment the current insurance availability customised to the requirement of drone owners and operators, the regulator said.

It said while citing how only a few general insurers in India currently offered insurance cover for Remotely Piloted Aircraft System (RPAS)/drones through existing products under Aviation insurance.

A circular on the product structure for insurance of RPAS/drones from IRDAI said all general insurers (other than standalone health and specialised insurers) are encouraged to file the product as per filing guidelines. Alternatively, the insurers may design and develop their own product, in tune with the minimum coverage specified under the product structure.

“The filing may be carried out at the earliest to respond to the new and quickly growing market,” A working group of IRDAI had last year developed a model product for drone insurance.

Any such product ought to necessarily offer third party insurance covering the liability that may arise on account of any mishap involving drones and causing death or bodily injury to any person or damage to property, the circular said.

The regulator said the objective behind announcing the product structure is to encourage general insurers come with insurance covers for drones and to facilitate flexibility and innovation in the development of insurance coverage for evolving technology requirements.

From legal liability to third-party, physical damage to drone body/hull; personal accident cover for operator; medical expenses cover to operator; to optional covers that will enhance the coverage, the product structure unveiled by IRDAI covers various aspects.

Prudent Management of Financial Resources of Insurers in the context of COVID-19 Pandemic.

The Authority has been assessing the economic position both at global level and at the Indian context, in general and the insurance sector in particular. The situation has been assessed based on the financial results of insurers for the quarters ending 30th September 2020 and 31st December 2020. It is observed that the performance of the insurers in terms of business is gradually reviving, albeit at a slower pace vis-a-vis the pre-covid levels.

Considering the revival phase of the economy in general and the insurance industry in particular and taking into account the solvency position of the insurers, it has been decided to withdraw the applicability of the circular dated 24th April 2020 mentioned above with immediate effect.

However, insurers are requested to take a conscious call in the matter of declaring dividends for FY 2020-21 considering their capital, solvency and liquidity positions.

Guidelines on Standard Personal Accident Insurance Product

The Insurance Regulatory and Development Authority of India (IRDAI) has directed all general and health insurance companies to mandatorily offer a standard personal accident insurance policy by 1 April 2021.

The policy will be named Saral Suraksha Bima, succeeded by name of the insurance company. It will be offered with a tenure of one year.

To make available a standard personal accident product with common coverage and policy wordings across the industry, an exposure draft on “Guidelines on Standard Personal Accident product” along with standard terms and conditions were issued by IRDAI in December 2020.

The minimum entry age to buy such a policy shall be 18 years and the maximum age at entry at least 70 for insured members, including the principal insured. Insurers are permitted to fix the maximum age at entry beyond 70 years, subject to underwriting policy. Dependent child will be covered from the age of three months to 25 years subject to the definition of ‘family’ and underwriting policy, said the final guidelines.

The standard PA product shall be offered on an individual basis. When offered as a family cover, the chosen sum insured will apply to each family member separately. The minimum sum insured shall be ₹2.5 lakh and the maximum sum insured shall be ₹1 crore. Sum insured offered shall be in multiples of ₹50,000. Beyond the range specified above, insurers can offer on their own and can use the same name for the product if all terms and conditions remain the same.

Policy coverage

Along with the base covers of Standard PA product, the policy will come with three optional covers. Temporary total disablement benefit and education grant covers will be offered on a benefit-basis. However, the third optional cover — hospitalisation expenses due to accident — will be offered on an indemnity basis. This means that the insured will get the claim settled equally to the actual amount of loss sustained, subject to the maximum sum insured.

The intimation about an event or occurrence that may give rise to a claim under this policy must be given within 30 days of its happening.

Major policy exclusions

Any claim for death or disablement (whether of a permanent nature or a temporary nature), hospitalization of the insured person directly or indirectly due to war (whether declared or not) and warlike occurrence or invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolutions, insurrections, mutiny, military or usurped power, seizure, capture, arrest, restraints and detainment of all kinds will not be covered, the final guidelines said.

Accident arising from intentional self-injury unless in self-defence or to save life, suicide or attempted suicide will not be covered either. An accident arising from ionizing radiation or contamination by radioactivity from any nuclear fuel or any nuclear waste from the combustion of nuclear fuel or any nuclear waste from combustion of nuclear fuel are excluded from the policy.

The Policy will come into effect from 1st April,2021.

Communications on basic information on health insurance policies to Policyholders.

The provisions of Regulation 12 of IRDAI (Protection of Policyholders’ interests) Regulations, 2017 specifying therein minimum information to be provided as part of health insurance policy. While the policy document is forwarded with relevant information, in order to continue the relationship with policyholders and to ensure information flow, it is considered important to periodically notify the policyholders certain relevant and key details relating to health insurance coverage available to the policyholders.

The IRDAI further specified below mentioned norms to ensure flow of relevant information to policyholders :

i) All the general and health insurers as part of policy servicing, shall communicate the following basic information about the health insurance policy to the policyholders:

a. Name of Product and policy number,

b. Extent of coverage available by way of available Sum Insured and Cumulative Bonus,

c. Number of insured people covered under policy,

d. Policy period,

e. Number and amount of claim settled (under relevant period), if any,

f. Balance Sum Insured and Accrued cumulative bonus available, if any,

g. Due date of renewal and premium payment frequency,

h. Premium amount due on renewal (to be specified at the time of renewal)

i. Grace Period (within 5 days after renewal due date)

j. Contact details (for any query or other issues) of customer support service of Insurer, Toll.

Free No. or e-mail Id etc.

ii) The above information shall be communicated by insurers to all the policyholders twice in a year, i.e., 6 months after issuance of policy and at least 1 month prior to the renewal due date. However, in case of a multiyear policy, the information can be shared with a frequency of 6 months from the date of issuance of policy.

iii) In addition to the above, in the event settlement of any claim under a health insurance policy, the insurer shall also communicate the details of balance sum insured along with the cumulative bonus available, if any, to the policyholder. This shall be notified to the policyholders within 15 days of settlement of claim.

iv) The insurer may choose any mode of communication (message, e-mail, letter etc.) for the purpose of notifying the above referred information. The sample messages / communications that all the insurers to notify to the policyholders is specified by the Authority. Insurers can improve on the same while refraining from making the message complex, unintelligible or too long with unnecessary information. These norms are applicable to all individual (both indemnity and benefit based) health insurance policies.

4. All the insurance companies shall comply with the instructions issued in this circular at the earliest and not later than 1st June 2021.

5. This has the approval of the competent authority.

New Rural Insurance Business Data Formats

The IRDAI has come out with new forms for collection and analysis of data related to Rural Insurance. The IRDAI has taken this step to monitor the performance of Rural Insurance Business and has asked Non-Life Insurers to share last three years data in specified forms.

In order to monitor the performance of Rural Insurance Business and support the development of policy and regulation for promoting rural insurance business, it is necessary to analyses data pertaining to Rural Insurance. It has therefore been decided to collect data as follows:

S. No Form Name Title
1 Rural A Crop Insurance
2 Rural Livestock, Poultry, Aquaculture, Insects and another Animal Insurance
3 Rural Rural/Agricultural Property and Rural/Farmer’s Package Insurance
4 Rural Rural Health and Personal Accident Insurance

You are required to submit the following:

1. The last 3 FY Rural Insurance data in the prescribed formats starting from FY 2017-18 on or before 31st March 2021.

2. Rural Insurance data in prescribed format for each Financial Year starting with FY 2020-21 to IIBI on or before 3 months of closing of Financial year.

Obligations of Insurers in respect of Rural and Social Sectors-Clarification with regard to ASHA Workers and MANREGA Workers.

The Authority has received requests for clarification as to whether the policies issued to persons under the occupations of ASHA workers and MGNREGA workers can be considered for social sector for compliance with Obligations mandated under IRDAI (Obligations of Insurers to Rural and Social sectors) Regulations,2015.

On consideration of the requests, it is clarified under the provisions of Regulation 7 of the IRDAI (Obligations of Insurers to Rural and Social sectors) Regulations,2015 that Accredited Social Health Activist (ASHA) workers and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) workers may be treated as pertaining to Rural and Social Sector category.

Modified Guidelines on product filing in health insurance business.

The insurance regulator has modified the existing guidelines on product filing in health insurance business. As per the file and use guidelines of the Insurance Regulatory and Development Authority of India (IRDAI) July 2020, general and health insurers are not allowed to modify the existing benefits and add new benefits in the existing products which lead to an increase in premium.

“However, it is clarified that insurers are permitted to effect minor modifications as stipulated consolidated guidelines on product filing in health insurance business. Addition of new benefits, upgradation of existing benefits may be offered as an add-on covers.

In addition, the regulator had also spelt out detailed norms on the presentation format of policy contract, which insurers need to follow for all health insurance products with effect from October 1, 2021.This will lead to further simplification and better understanding of the policy for customers as the same format will be used across all insurers using plain and simple language.

The IRDAI has been working towards simplifying insurance offerings and bringing in transparency in order to encourage more people to opt for insurance.

The modified guidelines on product filing in the health insurance business are a step in that direction.

Health Insurance Claims Settlement

IRDAI has asked all insurers to be more transparent in their health insurance claim settlement process and apprise the policyholders of reasons in case of denial of claims filed.

It essential that all insurers establish procedures to let policyholders get clear and transparent communication at various stages of claim process.

The IRDAI instructed that “All the insurers shall ensure putting in place systems to enable policyholders track the status of cashless requests/claims filed with the insurer/TPA through the website/portal/app or any other authorised electronic means on an ongoing basis.”

The circular on ‘Health Insurance Claims Settlement’ is addressed to life, general and standalone health insurance companies including the third-party administrators (TPAs).

It has said insurers should ensure that policyholders are provided granular details of the payments, amounts disallowed and the reasons for the amount disallowed, as per the regulatory norms.

Modification of Guidelines on Standard Personal Accident Insurance Product

The IRDAI has drawn Reference to Annexure-1 (Policy terms and conditions of the product) of Guidelines on Standard Personal Accident Insurance product issued vide Circular Ref No: IRDA/HLT/GDL/MISC/036/02/2021 dated 25.02.2021.

In partial modification of the terms and conditions, in compliance with the provisions of Regulation (14) of IRDAI (Health Insurance) Regulations 2016, the following clause is inserted under section 8 – “General terms and conditions” of policy terms and conditions of the product:

8.18 Free look period

The Free Look Period will be applicable on the new policy and not on renewals.

1. The insured will be allowed a period of fifteen days from date of receipt of the Policy to review the terms and conditions of the Policy, and to return the same if not acceptable.

2. If the insured has not made any claim during the Free Look Period, the insured shall be entitled to

a) a refund of the premium paid less any expenses incurred by the Company on medical examination of the insured person and the stamp duty charges or.

b) where the risk has already commenced and the option of return of the Policy is exercised by the insured, a deduction towards the proportionate risk premium for period of cover or.

c) where only a part of the insurance coverage has commenced, such proportionate premium commensurate with the insurance coverage during such period.

Issuance of Electronic Policies

The IRDAI looking the position of COVID-19 Pandemic and to take appropriate measures to save lives policyholders drawn reference to the provisions of Regulation 4 of IRDAI (Issuance of e-Insurance policies) Regulations,2016 and the exemption granted vide circular Ref: IRDAI/Life/Cir/Misc/207/08/2020 dated 4th August 2020.

In the wake of continuing situation of Covid19 Global Pandemic with all public health measures in place such as hand hygiene and social distancing, and taking into account (i) and (ii) below,

i) the feedback received from the Life Insurers expressing difficulties in printing, handling and dispatch of policy documents.

ii) the desirability of adopting total digital means of doing business in the interests of policyholders and other stakeholders.

Exemption is allowed for six months more by Competent Authority under Proviso to Regulation 4(iii) of the Referred Regulations, from the requirement to issue policy document, copy of proposal form in physical form.

The exemption is subject to

a) Life Insurer confirming the date of receipt of electronic policy document by the policyholder through PIVC or other means and preserving the proof so that Free Look period may be calculated from that date.

b) Thirty (30) days Free Look period may be allowed for all such electronic policy documents.

c) Return of electronic policy document by mail by policyholder with clear intention of cancellation of policy shall be valid for Free Look Cancellation.

d) Express consent of the policyholder to receive electronic policy bond is required. If a policyholder insists on hard copy, the same has to be issued without any charges.

e) Policy document shall be sent to the email id submitted by the proposer.

The exemption shall be valid for all policies issued up to 30th September 2021.

Short Term Covid Specific Health Insurance Policies

IRDAI permitted all general and health insurance companies to offer Short Term Covid specific health insurance policies vide circular ref. no: IRDAI/HLT/REG/CIR/156/06/2020 dated 23.06.2020 till 31st March 2021.

IRDAI also introduced two Standard Covid specific health insurance products “Corona Kavach Policy” vide circular ref. no: IRDAI/HLT/REG/CIR/163/06/2020 dated 26.09.2020 and “Corona Rakshak Policy” vide circular ref. no: IRDAI/HLT/REG/CIR/164/06/2020 dated 26.06.2020. These two products were also permitted to be offered till 31.03.2021.

Taking the prevailing Covid situation into consideration, it is decided to allow all insurers to offer and renew short term Covid specific health policies including “Corona Kavach Policy” and “Corona Rakshak Policy” up to 30.9.2021.

Extension of timelines for sale and renewal of Short Term Covid Specific Health Insurance Policies.

IRDAI has extended timelines for sale and renewal of short term Covid specific health insurance policies.

In partial modification of Clause 5 of Guidelines on introduction of short-term health insurance policies providing coverage for COVID-19 specific diseases of Circular ref.no: IRDAI/HLT/REG/CIR/156/06/2020 dated 23.06.2020 all insurers are permitted to offer and renew short term Covid specific health policies up to 30.9.2021.

Accordingly, Corona Kavach Policies offered as per Guidelines on Covid Standard Indemnity based Health Policy of Circular ref no. IRDAI/HLT/REG/CIR/163/06/2020 dated 26.09.2020 and Corona Rakshak Policies offered as per Guidelines on Covid Standard benefit-based Health Policy of Circular ref no. IRDAI/HLT/REG/CIR/164/06/2020 dated 26.06.2020 are permitted to be offered and renewed by all insurers up to 30.9.2021.

All other terms and conditions remain valid as specified under the respective guidelines.

(a) Issuance of Electronic Policies and (b) Dispensing with Physical Documents and Wet Signature on the Proposal Form

The IRDAI has extended period of issuance of Electronic Polices and Dispensing with Physical Documents and Wet Signature.

This has reference to IRDAI circular Ref: IRDA/NL/CIR/MISC/237/09/2020 dated 10th September 2020 on the above subject. The exemptions granted for issuance of electronic policies as well as dispensing with physical document and wet signature have been extended upto the period 30/09/2021.

Fraudulent Messages /Unsolicited Commercial Messages

The IRDAI has through this circular instructed insurer to register their templates as per changed regulations of TRAI, while soliciting prospective customers.

Salient features of circular are.

1. In July 2018, Telecom Regulatory Authority of India (TRAI) notified the regulatory framework for unsolicited commercial calls and messages which requires Principal entities (PE) including Insurers to register with their respective telecom service providers, to be allotted a header along with their identity for proper identification of all messages and voice calls.

2. All Insurers are hereby directed to register their templates of the messages with their respective telecom service providers in controlling unsolicited calls including fraudulent calls and messages from Insurers to the Policyholders.

3. The new framework of TRAI is to enable policyholder protection and in the interest of public from fraudsters using fake identities as Insurers. Also, TRAI has indicated that the non-adoption of its new procedures would result in disruption of delivery of messages to the policyholders.

Insurers are directed to complete the registrations with their respective telecom service providers as per the framework implemented by TRAI and confirm compliance of this direction to the Authority by email to [email protected] on or before 5th April 2021.template

Insurance Amendment Act, 2021

The Insurance (Amendment) Bill, 2021 was introduced in Rajya Sabha by the Minister of Corporate Affairs, Ms. Nirmala Sitharaman, on March 15, 2021. The Bill amends the Insurance Act, 1938 and same has been notified by the Government through Notification dated 25/03/2021. The Act provides the framework for functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, its shareholders, and the regulator (the Insurance Regulatory and Development Authority of India).

Foreign investment: The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity. The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74% and removes restrictions on ownership and control. However, such foreign investment may be subject to additional conditions as prescribed by the central government.

Investment of assets: The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities. If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India. The Act specifies in an explanation that this will also apply to an insurer incorporated in India, in which at least: (i) 33% capital is owned by investors domiciled outside India, or (ii) 33% of the members of the governing body are domiciled outside India.

Standard Products on Fire and Allied Perils Insurance Business

On 4th January 2021, the Authority had announced the launch of the following three standard products by all general insurers carrying on the business of Fire and Allied perils insurance business, with effect from 1st April 2021.

(i) Bharat Griha Raksha (meant for Residential Buildings and Home Contents)

(ii) Bharat Sookshma Udyam Suraksha (meant for enterprises where the total value at risk at any one location is upto Rs. 5 Crore)

(iii) Bharat Laghu Udyam Suraksha (meant for enterprises where the total value at risk at any one location is more than Rs. 5 Crore and upto Rs. 50 Crore)

2. All the above products are available with the insurers for issuance as both new policies and as renewals with effect from 1st April 2021.

3. For the information of proposers and policyholders, each of the three products issued by the insurers will bear a Unique Identification Number (UIN).

Dividend Criteria for Equity Investment under” Approved Investment”

The IRDAI has permits Insurers to classify investments in Preference Shares and Equity Shares as a part of “ Approved Investments”, on complying with some specific conditions.

Considering the representations made by Life and General Insurance Councils, the Authority in exercise of the powers conferred under Regulation 14(2) of the IRDAI (Investments) Regulations, 2016, hereby permits Insurers to classify investments in Preference Shares and Equity Shares as a part of “Approved Investment” if such Shares have paid dividend “for at least 2 years out of 3 consecutive years immediately preceding ” instead of “for at least 2 consecutive years immediately preceding” (as required under Regulation 3(a)(4) and 3(a)(5) of IRDAI (Investment) Regulations, 2016) for the period from 1st April, 2020 to 30th Sep, 2021.

Conclusion: The Articles consists of Circulars/Guidelines/ Regulations and amendments thereof the competent authorities during the quarter ended on 31st March,2021.

*****

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws and take appropriate advice of consultants. The user of the information agrees that the information is not professional advice and is subject to change without notice. Authors assume no responsibility for the consequences of the use of such information.

Download IRDAI Regulatory Updates –For Quarter Ended 31st March 2021

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