IRDAI Regulations, 2024: Safeguarding Policyholders’ Interests

Bittu Kumar

30 Mar, 2024

The regulation dated February 14, 2024, about the Protection of Policyholders’ Interests and Allied Matters of Insurers, passed by the Insurance Regulatory and Development Authority of India (IRDAI Regulations, 2024). The notification has already been updated on the portal of the IRDAI website. To facilitate business operations, lessen the burden of compliance for stakeholders, and safeguard policyholder interests, the IRDAI has thoroughly reanalysed the regulations. The IRDAI will also be submitting recommendations based on advice from insurance councils. The Insurance Council has formed the Regulations Review Committee (RRC), which has recommended unified Regulations for the Protection of Policyholders’ Interests and Allied matters of the insurers to protect the various interests of the policyholders such as the receipt of the premium, nomination, and assignment of the policies.

Takeaways of the IRDAI Draft 2024

The thorough draft for the Insurance Regulatory and Development Authority of India (Protection of the Policyholders’ Interest and Allied Matters of Insurers) Regulations, 2024 has further deliberated to consolidate with the provision of the following regulations mentioned below:

1. The IRDAI (manner of receipt of premium) Regulations, 2002
2. The IRDAI (places of business) Regulations, 2015
3. The IRDAI (fee for registering cancellation or change of nomination) Regulations 2015
4. The IRDAI (fee for granting written acknowledgement of receipt of notice of assignment or transfer) Regulations, 2015
5. The IRDAI (issuance of e-insurance policies) Regulations, 2016
6. The IRDAI (outsourcing of activities by Indian insurers) Regulations, 2017
7. The IRDAI (protection of Policyholders’ interests) Regulations, 2017
8. The IRDAI (insurance advertisements and disclosure) Regulations, 2021

IRDAI Draft 2024: Policyholder Protection revisions

The thorough draft of IRDIA (Protection of Policyholder’s Interests and Allied Matters of the Insurers) Regulations, 2024, has undergone some major changes proposed in the draft. These are the following changes below in the draft as follows:

1. The draft has been broadly divided into two parts:
   • Part A majorly covers the provisions related to the protection of the interest of the policyholders
   • Part B covers the provision related to the operation and allied matters of the insurers.
2. Protection of the welfare of the policyholders:
   • Insurance policies have to meet the defined criteria to be issued in an e-form, i.e. electronic form.
   • There is no policy in case life insurance is issued unless the nomination is obtained.
   • The nominated provision concerning the general, whatever applicable, and health insurance has been introduced.
   • To enable the e-transfer (Electronic transfer) for the refund and payments of the claims and insurer, and also to collect the bank account details of the insured at the proposal stage.
   • The authorities have also introduced the free lock period for the policies obtained through any mode within 30 days from receipt of the policy statement.
3. Opening of the place of business
   • There is no need to take prior approval for the insurers to meet the specified criteria.
   • The returns defined the solvency ratio probability in three years out of five years and also have an acceptable track record, allowing them to open an office at IFSCA.
   • The returns mentioned for the foreign branch office are dispensed with.
4. The requirement for filing the advertisement with the authority has to be dispensed with.
5. The already existing requirement of the reporting of the outsourcing is dispensed with. The insurers are needed to make necessary disclosures relating to their annual reporting.

At last, it has been advisable by the IRDAI to all the stakeholders to forward their comments or any suggestions pertaining to the proposed regulations in the attached format (Annexure-A) on or before 5:00 P.M onwards on the 4^th March,2024 to Ms. Spandana V, Manager on the mail I.D- spandana.v@irdai.gov.in along with a copy to Shri K Sridhar, DGM on the mail I.D- sridhar@irdai.gov.in

Conclusion

The proposed IRDAI regulations mark a significant impact in modernizing and also rationalizing the regulatory arena of the Indian insurance industry. To balance the interest and welfare of the policyholders with the operational requirements of the insurer. This regulation will also help to build a more dynamic and consumer-friendly market for insurance holders. It can also be assumed that these regulations will contribute to the overall development and stability of the insurance market, simultaneously safeguarding the welfare of the policyholders.