The Insurance Regulatory and Development Authority of India (IRDAI) takes into account the interests of policyholders while framing regulations. The apex body constantly tries to make positive changes in insurance policies so that you can benefit from better coverage. IRDAI also underwent several changes in 2020, some for the COVID epidemic and some others to make insurance policies more consumer-friendly. Let’s have a look at some of the major initiatives taken by IRDAI in 2020 –
There is a need for innovation and invention so that insurance policies meet the new and old demands of the customers. However, launching innovative products can prove to be financially challenging for insurance companies, especially if their products are not popular. Therefore, to promote innovation while keeping the cost-factor under control, IRDAI has launched a ‘sandbox’ initiative. This initiative is for innovations in insurance. Under this initiative, insurance companies can test-launch pilot products that provide specific benefits. For example, a ‘pay-as-you-drive’ motor insurance policy was introduced under the ‘Sandbox’ initiative. The schemes launched under the ‘Sandbox’ initiative are offered for a limited period. If, within that time, they become popular, insurance companies can launch a full policy. Therefore, the ‘Sandbox’ initiative encourages insurance companies to experiment and offers new benefits to you, the customer.
Health insurance initiative
The widespread epidemic increased the importance of health insurance policies. Those who already had more health insurance plans depended on their policies and those who were purchased without insurance, if COVID knocked, health insurance was purchased to cover the medical bills. Amidst the uncertainty amid this crisis, IRDAI issued several directives to insurance companies to make their health insurance policies customer-centric. Some of these instructions are as follows –
- Dealing with health insurance claims To ensure that policyholders settle their health insurance claims easily during the epidemic, IRDAI asked insurance companies to expedite their settlement process. In addition, it urged insurance companies not to dismiss their claims in unavoidable circumstances.
- COVID launched specific health plans The COVID hospital incurs considerable consumptive costs, costs that are excluded from general health insurance policies. Due to this exclusion, policyholders were facing considerable out-of-pocket expenses on hospitalization due to COVID. To solve the financial dilemma of the COVID transition, IRDAI introduced two new health insurance plans, most notably for COVID. Corona Armor was initiated as a compensation policy covering all hospitalization costs without any deductions. On the other hand, Corona Guard was launched as a fixed benefit plan, which was paid outright if you were hospitalized for 72 hours or more due to COVID. Both of these policies address the health insurance needs of individuals at low premiums and comprehensive coverage. They have also become the most popular scheme because the epidemic is still threatening large numbers of people.
- Introduction of welfare benefits in health insurance schemes IRDAI has also asked insurance companies to provide welfare benefits to their policyholders as a part of their health insurance policies. With this initiative, you will also be rewarded for maintaining a healthy lifestyle, exercising and staying fit. Therefore, it will promote healthy life. Furthermore, this will also benefit insurance companies as the claim experience will be favorable when the policyholders become healthy.
Life insurance initiative
In the life insurance segment also, IRDAI made two major changes which are as follows –
- Sarva Life Insurance launched Term insurance is the most basic type of life insurance policy and yet modern day plans have a comprehensive benefit structure with multiple layers. This confuses the average policyholder and makes it challenging to choose an appropriate policy. To standardize the humble term scheme, IRDAI has introduced an all life insurance policy. It will be a standard policy offering a standard coverage that will also be affordable. This policy will come into effect from 1 January 2021 and it is expected that term insurance will be easy to buy.
- Introduction to online KYC Earlier, physical signatures were required on the proposal form to prove its authenticity. However, buying and selling insurance plans was still difficult with social security norms. Therefore, IRDAI introduced the concept of online KYC in which physical signatures are replaced with online ones. Now, you do not have to sign the offer form to buy the policy. KYC verification can now be done via OTP, digital signature or authentication link sent to your email ID. This has made it easier to buy and sell life insurance.
Motor insurance initiative
There was only one change in the motor insurance section. IRDAI removed the concept of long-term self-damage coverage. From 1 August 2020, only third party coverage is available for a longer period and that too only for new vehicles. Own loss cover can be availed on an annual basis and can be made cheaper and more transparent with respect to bonuses without any claims.
All these changes are positive changes that have made insurance more accessible, more relevant and more useful. While you can find solutions to your insurance needs very easily, insurance companies can also take advantage of the increase in popularity of their insurance plans. Furthermore, with these changes, insurance penetration is also expected to increase. There is a win for everyone, right?