In a recent communication, the Insurance Regulatory and Development Authority of India (IRDAI) has said retail policyholders can cancel an insurance policy at any time during the term by informing the insurer and eligible to get the refund for the remaining policy period.
IRDAI Allows Policyholders To Cancel The Policy
The move is aimed towards Giving more flexibility and freedom to policyholders.
Further, while announcing a host of reforms in the sector on Tuesday, the IRDAI said, “In case the policyholder cancels the policy, he/ she is not required to give reasons for cancellation. The insurer can cancel the policy only on the grounds of established fraud, by giving a minimum notice of 7 days to the retail policyholder.”
IRDAI mentioned that each & every insurer should have a retail product which is identified and designated as a base product defining the necessary minimum coverage in each line of business.
In case, the customer cancels the policy, the insurer should refund proportion premium for unexpired policy period, if the term of the policy is up to one year and there is no claim made during the policy period, according to IRDAI.
No Claim Rejection For Documents
Further, IRDAI mentioned that the refund premium for the unexpired policy period should be made in respect of policy with the term more than one year and the risk coverage for such policy years has not commenced, in a master circular.
Besides this, the regulator noted that no claim should be rejected for want of documents.
This simply means that all the required documents should be called at the time of underwriting the proposal.
Adding, “The customer may be asked to submit only those documents that are directly related to the claim settlement such as claim form, driving license, permit, fitness, FIR, untraced report, fire brigade report, post mortem report, books of accounts, stock register, wage register and repair bills (only in cases where cashless is not available), wherever applicable. Under no circumstances can the insurer cancel statutory Motor Third Party Liability insurance or any other compulsory insurance mandated by law except in case of double insurance or total loss.”
In addition to this, every retail customer should be given a Customer Information Sheet (CIS) with every policy explaining in simple words, basic features of a policy at one place, the regulator said.
