The Indian government plans to launch extensive reforms in insurance sector policy to protect consumers and increase insurance coverage rates. Among the recent changes in the insurance sector, the free-look period now extends for one year instead of one month.
This new policy reform enables policyholders to review their insurance contracts for an entire year before deciding to cancel them if they believe the terms are unsatisfactory, thus preventing mis-selling.
The insurance policy provides customers with a free-look period which enables them to terminate their coverage without paying any additional fees. The standard duration of this period used to be one month. However, the tenure did not provide customers enough time to review their policy details thoroughly.
The one-year extension of this period enables policyholders to thoroughly review their coverage benefits along with other conditions while ensuring the policy meets their requirements. The extended time helps customers confirm their policy purchases that fulfil their requirements.
A composite licence system is considered to be a major upcoming insurance reform. With this new licencing structure, insurance providers can combine life insurance products with non-life insurance products within their schemes.
The industry seeks to create a streamlined regulatory structure, boosting operational performance throughout the sector. Consumers obtain better service through composite licences as these policies unite multiple types of insurance coverage [under a single policy] while streamlining process and transparency.
The insurance sector experiences ongoing mis-selling problems as agents and banks often force customers to buy unnecessary insurance policies. The government plans to establish new regulations which will control unsolicited sales activities.
A new requirement mandates insurance providers to contact customers through callback before concluding any insurance sale. The company must perform this verification process to make sure the customer understands the policy before the sale is finalised.
The government has established a requirement for insurance policy-selling agents to receive thorough training and full certification before they can operate. The implemented steps work to minimise situations where customers purchase inappropriate or unnecessary policies to shield them from potential financial loss.
The government plans to enhance foreign direct investment (FDI) in the insurance sector by 100% through necessary legal changes. The industry expects this move to attract extra capital that will create beneficial market competition and enhance service quality throughout the sector. The regulatory authorities plan to update rules regarding investment practises, profit transfer procedures, and organisational frameworks to promote enduring industry growth.
Customers become victims of mis-selling practices because agents and banks force insurance policies on them without performing proper need assessments or disclosing policy details. People in rural areas experience these types of practices frequently since they have limited financial knowledge, making them susceptible to agent persuasion leading to coverage that proves burdensome.
The government intends to create a structured policy surrender procedure which will guide customers who want to cancel their policies. The implementation of strict rules will help stop unwanted sales activities, guaranteeing policyholders have complete knowledge of their choices.
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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