IRDAI eyes instalment mode of insurance claim settlement

IRDAI eyes instalment mode of insurance claim settlement
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New Delhi, Apr 8: Insurance regulator IRDAI is planning to give policyholders an option to receive payment of claims in instalments under certain policies like personal accident (PA) and benefit-based health insurance. The regulator had set up a working group to study a proposal in this regard and the panel had submitted its report in January this year after examining the concept of settlement of PA and benefit-based health insurance claims in instalments.
Now, the IRDAI has come out with draft guidelines and sought comments from stakeholders. It is of the view that the option of settlement of claims in instalments will ensure that claimants have regular income for a reasonable period of time upon happening of a contingent event.
The draft guidelines said the policyholders may be provided an option of choosing either settlement of claim in lump sum or in equated instalments, or both in parts. Further, insurers should put in place a procedure to capture the option exercised by the policyholder at the point of sale and at various stages of the policy.
According to the draft guidelines, the claim payment period of the product could be maximum of five years and “the claim instalments shall be spread during claim payment period”. Also, the premium rate for the both the options should be same, IRDAI said, adding “the total claim amount payable in instalment option shall always be higher than the lump sum option”.
To safeguard policyholders’ interests and to enable them in taking an informed decision, the draft said the policy wordings relating to the benefit stricture should be in simple language and clearly defined. Stakeholders can offer comment on the draft guidelines by April 17, 2019.