What do IRDAI’s draft regulations on insurance policies mean for policyholders?

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Insurance Regulatory and Development Authority of India (IRDAI) represents a noteworthy development. The draft regulations it has introduced carry potential implications that could be advantageous for policyholders. The document, named “Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024", brings together eight separate regulations into a unified and comprehensive framework.

The free-look period for reviewing policies will be extended to 30 days from the date of receiving the policy document, irrespective of the mode of acquisition. The noteworthy change of extending the free-look period to 30 days upon receiving policy documents, applicable across all acquisition methods (online, physical, etc.), holds potential advantages for consumers. Initially, policyholders now have an increased duration for review.

This additional time enables policyholders to meticulously assess the policy details, encompassing coverage, exclusions, terms, and conditions, before arriving at a final decision. Instead of rushing through the policy documents, policyholders can now make well-informed decisions. This duration allows them to compare policies from different companies and select the option that aligns best with their needs, potentially resulting in more informed choices.

There is a diminished likelihood of impulsive purchases. An extended timeframe may help deter rushed decisions influenced by incomplete information or pressure tactics. IRDAI suggests the compulsory gathering of policyholder or nominee information at the proposal stage to streamline the electronic transfer of premium refunds.