As soon as general insurers are freed from the shackles of standard products, they could offer a motor insurance policy that provides for settlement of full claims amount without any deductions for depreciation as per the current practice.
General insurers would also reimburse travel expenses or make available a rent-a-car service for the period the insured motor car remains in a garage for repairs.
Currently, insurers settle motor insurance claims with deductions as high as 40 per cent.
These and many more features are being mulled for inclusion in policies when the Insurance Regulatory and Development Authority (IRDA) lifts controls on policy wordings and terms and conditions on general insurance policies from March 31, 2008.
General insurers are also toying with the idea of providing a service whereby it would arrange for towing a failed motor car to a garage for repairs and get it delivered at the doorstep of the customer.
At present, non-life insurers have to use standard policy wordings and terms and conditions. Thus, there are standard insurance products in the market and customers do not have much of a choice. Similar flexible covers would also be made available in fire and engineering insurance availed of by companies.
For example, a corporate customer now can buy an industrial all-risk policy only if the minimum sum insured is Rs 100 crore.
After insurers are freed to structure policies according to customised needs, they could even provide the all-risk cover for smaller sums insured, which would ensure fire, marine, engineering and miscellaneous covers need not be bought separately.
In a free market, insurance companies will also be able to introduce fire policies without the under-insurance clause or the first loss clause. This would mean, if a company buys a Rs 50 crore policy for a Rs 100-crore plant, then the insurer would pay 100 per cent of the claim if it is less than the sum insured.
Currently, insurers settle claims in the proportion of the insurance cover taken to the market value or the reinstatement value of the plant.
Insurers have started the exercise of relooking at the present wordings, getting feedback from brokers, agents, intermediaries and customers to develop their own wordings.
Besides, the General Insurance Council (a self-regulatory body of all general insurance companies) is working on developing common market wordings that can be used by insurance companies once the Irda allows insurers the freedom to frame their own wordings, terms and conditions for insurance policies. These wordings would have to be approved by the Irda.
The market wordings being prepared by GIC will have all possible clauses. If a corporate customer wants a clause other than the standard market wordings, then insurance company would have to get the Irda’s approval.
At present, the IRDA has partially freed up pricing from January this year.
Under this partial detariffed phase, insurers are allowed to reduce rates up to 51.25 per cent of the erstwhile tariffs. From March 31 2008, IRDA will lift the tariff wordings, terms and conditions. That means insurance companies will be able to use their own wordings.
With each insurance company framing its own terms, conditions, it will lead to confusion for the individual and the corporate customer.
Explaining the rationale behind the General Insurance Council developing market wordings, KN Bhandari, secretary general of GIC said, “The move is to bring uniformity in wordings for insurance companies. Uniformity in wordings will help customers compare pricing of different insurance companies, avoid legal hassles and reduce mis-selling.”
General insurers would also reimburse travel expenses or make available a rent-a-car service for the period the insured motor car remains in a garage for repairs.
Currently, insurers settle motor insurance claims with deductions as high as 40 per cent.
These and many more features are being mulled for inclusion in policies when the Insurance Regulatory and Development Authority (IRDA) lifts controls on policy wordings and terms and conditions on general insurance policies from March 31, 2008.
General insurers are also toying with the idea of providing a service whereby it would arrange for towing a failed motor car to a garage for repairs and get it delivered at the doorstep of the customer.
At present, non-life insurers have to use standard policy wordings and terms and conditions. Thus, there are standard insurance products in the market and customers do not have much of a choice. Similar flexible covers would also be made available in fire and engineering insurance availed of by companies.
For example, a corporate customer now can buy an industrial all-risk policy only if the minimum sum insured is Rs 100 crore.
After insurers are freed to structure policies according to customised needs, they could even provide the all-risk cover for smaller sums insured, which would ensure fire, marine, engineering and miscellaneous covers need not be bought separately.
In a free market, insurance companies will also be able to introduce fire policies without the under-insurance clause or the first loss clause. This would mean, if a company buys a Rs 50 crore policy for a Rs 100-crore plant, then the insurer would pay 100 per cent of the claim if it is less than the sum insured.
Currently, insurers settle claims in the proportion of the insurance cover taken to the market value or the reinstatement value of the plant.
Insurers have started the exercise of relooking at the present wordings, getting feedback from brokers, agents, intermediaries and customers to develop their own wordings.
Besides, the General Insurance Council (a self-regulatory body of all general insurance companies) is working on developing common market wordings that can be used by insurance companies once the Irda allows insurers the freedom to frame their own wordings, terms and conditions for insurance policies. These wordings would have to be approved by the Irda.
The market wordings being prepared by GIC will have all possible clauses. If a corporate customer wants a clause other than the standard market wordings, then insurance company would have to get the Irda’s approval.
At present, the IRDA has partially freed up pricing from January this year.
Under this partial detariffed phase, insurers are allowed to reduce rates up to 51.25 per cent of the erstwhile tariffs. From March 31 2008, IRDA will lift the tariff wordings, terms and conditions. That means insurance companies will be able to use their own wordings.
With each insurance company framing its own terms, conditions, it will lead to confusion for the individual and the corporate customer.
Explaining the rationale behind the General Insurance Council developing market wordings, KN Bhandari, secretary general of GIC said, “The move is to bring uniformity in wordings for insurance companies. Uniformity in wordings will help customers compare pricing of different insurance companies, avoid legal hassles and reduce mis-selling.”
Source: Falaknaaz Syed, (Business Standard)
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