IRDAI Consolidates 8 Regulations to Boost Policyholder Protection and Ease of Business
SDG 8: Decent Work and Economic Growth | SDG 16: Peace, Justice and Strong Institutions
Institutions: Insurance Regulatory and Development Authority of India (IRDAI) | Insurance Councils
The Insurance Regulatory and Development Authority of India (IRDAI) has issued the Exposure Draft of the (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024, which represent a sweeping rationalization by consolidating eight different existing regulations into a single unified framework. The objective is to simultaneously reduce compliance burden on the industry and significantly enhance policyholder protection.
The draft includes major benefits for policyholders, such as extending the ‘Free Look Period’ to 30 days for life and health insurance policies. Furthermore, to streamline the claims process, insurers are mandated to collect bank account details of the insured at the proposal stage to enable electronic transfer of refunds and claim payments. Nomination provisions are made mandatory for life insurance and introduced for general and health insurance.
The ‘Free Look Period’ is the duration immediately following the policy delivery date during which the policyholder has the legal right to review the terms and conditions of their policy. If the policyholder is dissatisfied with the product for any reason, they can return it to the insurer for a full refund of the premium paid, making it a critical consumer protection measure against mis-selling.
For insurers, operational relief measures include dispensing with the need for prior regulatory approval for opening new places of business (including offices at IFSCA) for entities meeting specified solvency and profitability criteria. The requirement for filing advertisements with the Authority has also been removed. The framework is broadly divided into two parts: Part A covers policyholder protection, while Part B addresses operations and allied matters.
Policy Relevance
This consolidation is a significant step towards modernizing India’s insurance sector and directly supporting IRDAI’s vision of ‘Insurance for All by 2047’. By strengthening regulations against mis-selling (e.g., mandating nomination and extending the free look period) and simplifying operational burdens (e.g., removing prior approval for branch expansion), the policy aims to build consumer trust, enhance market penetration, and improve the speed of claims settlement across the industry.
Follow the full news here: IRDAI Consolidated Regulations on Protection of Policyholders’ Interests