Highlights of IRDA (protection of policyholder’s interest) Regulations 2017

In a major move to protect consumer interests and curb malpractices in India, the Insurance Regulatory and Development Authority (‘IRDA’), on 30 June 2017, notified the IRDA (Protection of Policyholders’ Interests)Regulations, 2017, which supersedes the existing IRDA (Protection of Policyholders’ Interests) Regulations, 2002.

Among other reforms, the 2017 regulations define more stringent timelines for investigation and settlement of claims.

Further, the 2017 regulations impose a Board-approved policy on insurers, with minimum disclosure requirements to counter mis-selling to policyholders. Separate regulations have been laid out for health policies in the new regulations.

The key highlights of the 2017 regulations are as follows:


  • The 2017 regulations extend their applicability to other regulated entities and distribution channels, including point of sales persons.
  • Health policies have been recognized separately, different from life and general insurance policies, with separate regulations being laid out for health policies.

Change in policy documents/ premium

  • To bring in transparency and counter mis-selling, the regulations require insurers to state the terms and conditions for claims and coverage terms explicitly and also disclose policy exclusions upfront under the groupings — standard, policy-specific and waived under additional premium.
  • According to the 2017 regulations, insurers are required to have in place a Board-approved policy with minimum disclosure requirements for protection of policyholders’ interests.
  • Insurers will need to display Board-approved service parameters and corresponding turnaround time on their website.
  • Insurers are required to revise their policy documents in accordance with the 2017 regulations, and submit a certificate of compliance to the IRDA by 31 December 2017.
  • The premium pertaining to health related or critical illness riders shall not exceed 100% of premium under the basic product, while the premium under all other life insurance riders put together shall not exceed 30% of premium under the basic product. Any benefit arising under each of these mentioned riders shall not exceed the sum assured under the basic product.

Settlement timelines

  • The timelines for death claims are reduced to 120 days from the date of receipt of claim intimation.
  • In respect of Maturity, Survival Benefit claims and Annuities – the Life Insurer shall pay the claim on or before the due date.
  • Insurers have 15 days to process the freelook cancellation to the policyholders.
  • With regard to a general insurance policy, the IRDA has tightened the timelines for surveyors/ loss assessors. In case of any deviation and delay in the timelines, the surveyors are required to keep the insured informed about the progress of the report.
  • Claims in respect of health policies are required to be settled within 30 days from the date of receipt of the last necessary document. In cases which warrant investigation, the claim is to be settled within 45 days.
  • In case of delay in settlement of claims, the insurer is required to pay a penal interest at the rate of 2% above the bank rate. Ambiguity in respect of the duration for which interest is required to be paid has also been cleared. The insurer will be required to pay interest for the entire turnaround time and not just the period of delay. For instance, if an insurer is required to settle a claim within 30 days but takes 35 days, the interest will be computed for 35 days, and not 5 days.

Grievance Redressal

  • While the former regulations required every insurer to have in place a grievance redressal mechanism, the 2017 regulations lay down the exact procedure to be followed by insurers for grievance redressal.

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