To make disclosures by both life and non-life insurance companies more meaningful, the insurance regulator has put up a revised format that will have to be filled up by insurers on a quarterly basis, starting December 31.
The Insurance Regulatory and Development Authority (Irda), in a recent circular, said that absolute data released by companies were meaningless and did not lend themselves to proper comparison and analysis as the numbers involved were contingent upon several factors, such as age of the insurer, the size of the insurer, the number of policyholders and the number of claims registered.
“Analysis of data relating to grievances becomes more meaningful when the grievances are correlated to policy servicing parameters or claims related parameters as may be the case,” said the Irda circular.
Towards this objective, the regulator has revised forms L41 and NL41 where the insurers make their periodic disclosures to the public. Among other things, the insurers will now have to give a break-up of all complaints made by customers — related to proposal, claim, policy, premium, refund, coverage, cover note and products.
Currently, companies make disclosures of complaints made by customers under heads like sales related, new business, policy servicing and claim servicing. Moreover, insurers will now have to make disclosures on duration-wise pending status, such as up to seven days, 7-15 days, 15-30 days, 30-90 days, 90 days and beyond.
Analysts say such detailed disclosures will make it easier for customers to do an analysis and go for an insurer that suits them the best.
In fact, in the exposure draft on standard products for unit-linked insurance products (Ulips), the regulator has made it mandatory for insurers to mention certain particulars in their brochures, such as investment strategies and risk control measures adopted by the insurer, and the changes in fundamentals like interest rates, tax rates, etc, affecting the investment portfolio. Companies have to make disclosures on composition of the fund — debt and equity — analysis within various classes of investment, investment portfolio details, sectoral exposure of the underlying funds and the ratings of investment made.
Apart from these, life insurance companies will have to furnish data to the regulator on a half-yearly basis (September and March) on switching options exercised by the policyholder, premium redirections exercised by the policyholders, partial withdrawals, top-up premium received and insurance cover multiple granted for each product — separately for single premium and non-single premium contracts.
The insurer will have to send a statement of account, every six months, within 15 days for policies in force, including discontinued policies where the proceeds are yet to be paid to the policyholder or his nominee, as the case may be. Typically, for insurance companies most consumer grievances are related to the product features, which are not explained at the time of selling the policy. Misselling of insurance products results in the policy getting lapsed because of non-payment of premiums.
Analysts say examples like converting single premium policies to regular Ulip policies, selling inappropriate products like Ulips for short-term goals and giving erroneous information on products like guaranteed products are most common customer grievances. Other areas of consumer grievances are settlement proceeds not received by the policyholder, surveyors not reaching on time to access the damage in case of non-life claims and disputes on total settlement amount and documentation.
The insurance regulator has underlined that public disclosure of risks faced by the insurers is critical for ensuring a fair and orderly insurance sector. The disclosures should be reliable and timely to ensure efficiency of the markets. They provide necessary feedback to the insurance regulator to ensure safety of investors as well as the policyholders.
Last year, the regulator made it mandatory for companies to put in place a system that will comply with the grievance redressal norms of the regulator. After receiving the complaint, the insurer will have to send a written acknowledgment to the policyholder within three working days and attend to the complaint with 15 days of its receipt.
To protect the rights and interests of policyholders, the Kamesam Committee made some pertinent suggestions, which were incorporated in Irda's Protection of Policyholders' Interests Regulations, 2002. The regulator has mandated that an insurance company will have to communicate, within 15 days of receiving the request, the decision on the new proposal to the proposer and the copy of the policy bond will have to be given to the proposer within 30 days of acceptance.
While every insurer has a place in the grievance redressal system, an aggrieved consumer can also approach the Insurance Ombudsman for complaints relating to personal claims for a value up to R20 lakh.
The regulator has also mandated that the claim on life insurance will have to be paid within 30 days of receipt of the claim documents and, if delayed, savings bank interest rate has to be paid to the policyholder for the number of delayed days.
In case of claim intimation for non-life insurance, the surveyor has to be appointed within 72 hours of the claim intimation and the report needs to be submitted within 30 days.
Analysts say the delay in non-life insurance-related issues takes place in submitting the report, which ultimately leads to a long delay in claim settlement and litigation.
To expedite redressal of consumer grievances, Irda has set up an Integrated Grievances Management System (IGMS), a web-based interface to ensure that it is accessible at all places on a real-time basis. The interface can also register complaints of the policyholders in physical form, or through email or voice call, and the complaints received will be escalated to the insurance company concerned.
After the policyholder's complaint is registered at IGMS, he will receive confirmation with a token number, which will be used by the regulator and the company to track the complaint. After registering at the website, the policyholder will have to give details of his PAN card, address proof, following which he can monitor the status of the complaint based on the reference number.
The system is integrated with every insurer's complaint management system and the policyholder is kept informed at every step. Moreover, if the policyholder is not satisfied with the resolution provided by the insurer, he can escalate the complaint for a review by Irda.