business : In IRDAI’s latest master circular for policyholders

business : The Insurance Regulatory and Development Authority of India (IRDAI) through a circular issued on June 19 has directed insurance companies to put in place an effective and robust grievance redressal system including a facility for submitting complaints online; arrangements for registering all complaints submitted to the insurer in various forms such as the insurer’s call centre, if deployed; and other arrangements for redressal such as internal ombudsman schemes. IRDA has also said that insurance companies need to widely publicise these arrangements. This is aimed at ensuring that customers or policyholders get greater clarity of information regarding grievance redressal measures. Ensuring that insurers have the right to make an efficient and prompt resolution of their grievances

Policyholders There is a strong technology-based mechanism for policyholder grievance redressal, as well as efforts to move towards “zero grievance”. Insurance companies are required to establish regular customer interface through consumer-friendly processes, run awareness campaigns, strengthen resolution processes with internal escalation metrics (if not satisfied with resolution at first level) and internal ombudsman schemes, said the press statement issued by IRDA on insurance reforms on June 19. According to Naval Goyal, founder and CEO of PolicyX.com, this move has come as a big relief for policyholders. “IRDA has given insurance companies the power to resolve all the grievances of policyholders at the earliest,” he said.

It has directed to appoint a dedicated officer to deal with complaints. Also, it has advised to have a board-approved grievance redressal policy for policyholders. It has reiterated that the focus of insurance companies should be on ‘zero grievance’. Insurance companies should integrate the complaint portal with the Insurance Bharosa portal for record purposes. Also, there is a need for clarity of information by insurance companies so that policyholders do not face any issues,” says Goyal. IRDA has set up a Policyholder Protection and Grievance Redressal Department, which will look after the following departments: redressal of grievances (life and non-life), promotional awareness initiatives, policyholder protection issues/initiatives, matters relating to Insurance Ombudsman, Right to Information (RTI) matters relating to policyholder protection issues.

Timelines for resolution of complaints: As per IRDA, every insurer must also ensure that all complaints are resolved within specific timelines. A written acknowledgement of the complaint to the complainant should be resolved immediately. If you want any further information from the complainant (allowed only once), you can do so within a week. If it is about resolution of the complaint and issuance of a final letter of resolution, it should happen within two weeks. If it is about closing the complaint in the absence of a response from the complainant, it should happen within eight weeks. Other reform measures: IRDA has asked insurance companies to constitute an advertising committee (approved by the board) and/or a senior-level official of the distributor channel to examine and approve advertisements to ensure that they are truthful and not misleading. IRDA has strictly stated that advertisements on unit-linked insurance products, index-linked products and annuity products with variable annuity payout options must contain adequate, accurate, clear and up-to-date information in simple language. The information may include, but is not limited to, the following-

Inherent Risks A factual picture of the risks involved; risk factors with specific reference to fluctuations in investment returns; possibility of increase in fees and charges associated with the fund or premiums paid. It may also include information about the contingency on which guarantees, if any, are payable and the exact amount of such guarantee. According to the master circular of IRDA, “Results of funds duly supported by relevant data shall be reported in advertisements only in relation to the past performance of the funds,

as well as in any other promotional material such as benefit illustrations, sales brochures, etc. The emphasis on past performance in advertisements should be reduced, however, past performance, wherever intended to be reported, should include: Compounded annual returns for the last five calendar years (shall adopt standardised calculations), expressed as percentages rounded off to the nearest 0.1 per cent.” “Where data for the last five calendar years is not available, as many years as possible should be shown. Where data for at least one calendar year is not available, as many years as possible should be shown. Where data for at least one calendar year is not available, past performance shall not be shown. It should clearly state, in the same font and size, that past performance is not necessarily indicative of future performance. The relevant benchmark index performance, if any, should be included,” IRDA’s master circular states.

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