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Irdai looks to double policy trial to 1 month

Published:

MUMBAI: You may soon get more time to read the fine print of your

insurance policy

and cancel it if it doesn’t suit you. Insurance regulator

Irdai

has proposed to extend the ‘free-look’ period for

policies

from 15 days to a month.
A

free-look period

allows

policyholders

to evaluate their insurance policies after purchase and cancel them within a specified time frame without a penalty, an insurance broker said.

This provision helps prevent mis-selling of insurance by providing policyholders with time to actually review the terms and conditions of their policies, protecting them from pressure tactics and enabling them to reconsider their decisions if they find the policy unsuitable or unnecessary.
Additionally, free-look period encourages insurance companies to be transparent in their sales practices, fostering trust between insurers and policyholders. The proposed norms also mandate life and health insurers to gather nominations and bank details of policyholders upfront, along with setting criteria for electronic policies. These proposals are part of the new rules in the Irdai (protection of policyholders’ interests and allied matters of insurers) Regulations, 2024, which consolidate eight regulations.
The broker added that besides including the free-look period, there should be increased awareness about the availability of the facility and how to utilise it. Very often, the intermediary is not incentivised to inform the customer about the availability of this feature.

The eight regulations include those on the issue of e-policies, outsourcing, ensuring policyholder protection, and disclosures in advertising. Others pertain to handling insurance premiums, establishing offices, registering policy changes, and providing written acknowledgements.
For insurers, Irdai has proposed to discontinue the need for filing advertisements with the authority. Also, insurers can open a new place of business if they meet specified criteria without prior approval from the regulator. Those meeting solvency ratios and profitability requirements can now open foreign branches, including at the International Financial Services Centre, without requiring specified returns. Additionally, insurance companies will not have to report their outsourcing arrangements to the authority – insurers are instead required to disclose outsourcing details in their annual reports.

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