BackIrda tightens norms for replacement of life insurance policy
Irda makes mandatory for agents to provide full details in transparent manner before persuading policyholders to shift to another life insurer
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New Delhi: Seeking to safeguard interest of customers, Irda has made it mandatory for agents to provide full details in transparent manner before persuading policyholders to shift to another life insurance firm.
Tightening of replacement norms would help in retaining the life insurance policy. “To protect the long-term interests of life insurance policyholders and to discourage intermediaries persuading lapsing, surrendering or making paid-up of an existing life insurance policy with the intent of canvassing or soliciting a new life insurance policy on the same life," Irda said in a draft exposure.
The guidelines envisage the full disclosure and transparent information to the policyholder to avoid a possible misrepresentation as to the factual position of financial consequences of replacing an existing life insurance policy, it said.
“It is also envisaged that these guidelines encourage fair market conduct and fair business practices amongst life insurers and insurance intermediaries," it added.
The draft said, “no life insurance agent, insurance intermediary or an insurer is permitted to replace a life insurance policy, except, if it is in the interest of the policyholder."
Every insurance intermediary or an individual agent would make every reasonable effort to keep in force the existing life insurance policy, it said. Replacement, if required, would be subject to certain conditions, including obtaining a written consent from the prospect for replacing existing policies.
Besides, it said, there is need to obtain the particulars of all existing life insurance contracts of the prospect and details of those policies that are proposed to be replaced.
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