IRDAI proposes to increase free look period to 30 days for policyholders

Enhancing the protection of insurance policyholders, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed to enhance the free look period to 30 days in the case of life and health insurance policies.

Free look period is the period during which a policyholder can review his decision to purchase the policy and if not satisfied can return the product and get a full premium refund.

The IRDAI is reviewing its various regulations to enhance the ease of doing business, reduce compliance burden on the stakeholders and ensure the policyholder's interest.

On Wednesday, the IRDAI issued the draft regulations titled 'Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests and Allied Matters of Insurers) Regulations, 2024,' consolidating eight different regulations.

The draft regulation relates to protection of policyholders' interests and allied matters like receipt of premium, nomination, assignment of policies, insurance advertisements, opening of branches and others.

As regards the policyholders the draft proposes: (a) Free Look Period: The free look period for the policies, obtained through any mode, shall be 30 days from the date of receipt of the policy document. (b) In order to enable electronic transfer of refund and for payments the claims, insurer to collect the details of bank accounts of insured at the proposal stage; (c) No policy in case of life insurance shall be issued unless nomination is obtained. (d) Nomination provisions relating to general, wherever applicable and health insurance policies introduced. (e) Insurance policies meeting the defined criteria to be issued in Electronic form.

For the insurers: (a) The requirement of filing of advertisement with the Authority has been dispensed with. (b) No prior approval requirement for insurers meeting the specified criteria. (c) An insurer having specified solvency ratio, profitability in three years out of five years and having satisfactory track record can now open foreign branches including office at IFSCA. (d) The returns specified for foreign branch offices are dispensed with. (e) The existing requirement of reporting of outsourcing is dispensed with.
Insurers are required to make necessary disclosures in this regard in their annual report.

The IRDAI has sought comments on the draft regulations by March 4 this year.