The Insurance Regulatory and Development Authority of India (IRDAI) keeps the interests of policyholders in mind when framing regulations. The apex body continuously tries to make positive changes in insurance policies so that you can benefit from better coverage. In 2020 also IRDAI made many changes, some specific to the COVID pandemic and others for making insurance policies more consumer-friendly. Let’s have a look at some of the main initiatives undertook by IRDAI in 2020 –
The ‘Sandbox’ initiative
Innovation and invention are needed so that insurance policies meet the new-age demands of customers. However, launching innovative products can prove financially challenging for insurance companies, especially if their products do not become popular. So, to promote innovation while keeping the cost-factor in control, IRDAI has launched the ‘Sandbox’ initiative. This initiative is for innovations in insurance. Under this initiative, insurance companies can test-launch pilot products providing specific benefits. For example, the ‘Pay-As-You-Drive’ motor insurance policy was launched under the ‘Sandbox’ initiative. The plans launched under the ‘Sandbox’ initiative are offered for a limited period of time. If, within that time, they become popular, insurance companies can launch a full-fledged policy. The ‘Sandbox’ initiative, therefore, promotes insurance companies to experiment and offers you, the customer, new benefits.
Health insurance initiatives
The widespread pandemic increased the importance of a health insurance policy. Individuals having health insurance plans started depending on their policies more than before and those who were uninsured bought health insurance to cover the medical bills if COVID came knocking. Amidst the uncertainty in this crisis, IRDAI issued many directives to insurance companies to make their health insurance policies customer-centric. Some of these directives are as follows –
- Handling of health insurance claims
To ensure that policyholders got their health insurance claims settled easily during the pandemic, IRDAI asked insurers to expedite their claim settlement process. Moreover, it urged insurance companies not to reject their claims unless under unavoidable circumstances.
- Launch of COVID specific health plans
COVID hospitalisation incurred a considerable consumables cost, cost which is excluded from normal health insurance policies. Due to this exclusion, policyholders were facing considerable out-of-pocket expenses if they were hospitalised due to COVID. To solve the financial dilemma of COVID infection, IRDAI introduced two new health insurance plans, especially for COVID. Corona Kavach was launched as an indemnity policy covering all hospitalisation costs without any deductibles. Corona Rakshak, on the other hand, was launched as a fixed benefit plan which paid a lump sum if you were hospitalised for 72 hours or more due to COVID. Both these policies have solved the health insurance needs of individuals at low premiums and comprehensive coverage. They have also become the most popular plans as the pandemic is still threatening a large number of people.
- Introduction of wellness benefits in health insurance plans
IRDAI has also asked insurance companies to offer wellness related benefits to their policyholders as a part of their health insurance policies. With this initiative, you would be rewarded for maintaining a healthy lifestyle, exercising and also for staying fit. This would, therefore, promote healthy living. Moreover, it would also benefit insurance companies because when the policyholders become healthy, the claim experience would be favourable.
Life insurance initiatives
Even in the life insurance segment, IRDAI made two major changes which are as follows –
- Launch of Saral Jeevan Bima
Term insurance is the most basic type of life insurance policy and yet modern day term plans have a comprehensive benefit structure with multiple layers. This confuses an average policyholder and makes it challenging to choose a suitable policy. To standardize the humble term plan, IRDAI has introduced the Saral Jeevan Bima policy. This would be a standard policy offering a standard coverage that would also be affordable. The policy would come into effect from 1st January 2021 and is expected to make buying term insurance easier.
- Introduction of online KYC
Earlier, physical signatures were necessary on the proposal form so that its authenticity can be proved. However, with social distancing norms still in place, buying and selling of insurance plans was becoming difficult. The IRDAI, therefore, introduced the concept of online KYC wherein physical signatures have been replaced with online ones. Now, you don’t have to physically sign the proposal form to buy the policy. The KYC verification can now be done through OTPs, digital signature or through an authentication link sent to your email ID. This has made buying and selling life insurance easier.
Motor insurance initiatives
In the motor insurance segment there was only one change. IRDAI removed the concept of long term own damage coverage. With effect from 1st August 2020, only third party coverage is available for a long term period and that too only for new vehicles. Own damage cover can be taken on an annual basis only making it cheaper and more transparent with respect to the no claim bonus that you can get.
All these changes are positive changes which have made insurance more accessible, more relevant and also more useful. While you can find the solution for your insurance needs much more easily, insurance companies can also benefit from a rise in popularity of their insurance plans. Moreover, with these changes, insurance penetration is also expected to increase. A win-win for all, isn’t it?