Existing and prospective customers of Indian life insurance firms will be better protected after the Insurance Regulatory and Development Authority (IRDAI) wrote to company chief executives on 26 September about acceptable market conduct.
Among a host of changes, was the addition of customised benefit illustrations at the point of sale for all products.
“The illustrations shall be clear and fair to enable a customer to make an informed decision,” the IRDAI stated.
It must be signed by the prospective policyholder, as well as the insurance agent/intermediary or life company.
The watchdog added that every insurer must send policyholders at least an annual statement that outlines their premium payment status, accrued bonus and other benefits.
Pensions
Life policies are not the only products that require illustrations, any pension offered by a life company now also needs one.
It should consider the “premium payment capacity, age, vesting age and future expected conditions” of each policyholder.
An illustrative target annuity or pension rates must be disclosed.
Training
All life insurers now need to provide periodic training to their agents and intermediaries before they are authorised to sell unit linked insurance products.
This will “ensure required expertise”, the IRDAI said.
Details of the number of agents/intermediaries who have received training must be submitted to the authority each year.
Suitability
All firms must also collect suitability information on every prospect and make all recommendations on the basis of the data collected.
This includes age, income, family status, life stage, financial and family goals, investment objective, insurance portfolios already held and other relevant information.
In addition, insurers are also now required to have a standardised presentation on their website for each product on offer to ensure that agents and intermediaries do not deviate and offer incorrect or incomplete information.
