On June 11, 2024, the Insurance Regulatory and Development Authority of India (IRDAI) released a master circular aimed at revamping the motor insurance landscape. These updates promise to streamline the claims process, enhance customer satisfaction, and introduce more flexibility in policy options. Here’s a detailed look at the key changes that will impact auto insurance policyholders.

Key Changes in the IRDAI Master Circular

1. No Rejection of Claims Due to Lack of Documents

• Insurers cannot reject motor insurance claims due to unavailability of documents.

• All necessary documents must be collected during the underwriting proposal stage.

• Additional documents directly related to claim settlement, like the claim form and driving license, can be requested if needed.

2. Streamlined Claim Settlement Timeline

• Insurers must settle claims within 7 days of receiving the survey report.

• Surveyors must be allocated within 24 hours of the claim report via the General Insurance Council tech-based solution.

• Surveyors have 15 days to submit their reports to insurers.

• Insurers are required to decide on claims within 7 days of receiving the survey report.

• Delays in settlement can result in penalties for insurers.

• Claims cannot be denied for breaches unrelated to the loss or for policyholder delays that do not increase the assessed loss amount.

3. Mandatory 'Pay As You Drive' Option

• Insurers must offer 'Pay as you drive' and comprehensive cover options prominently.

• The 'Pay as you drive' policy adjusts premiums based on actual vehicle usage.

• This option includes comprehensive own damage (OD) and third-party (TP) coverage, with premiums determined by the distance driven.

4. The popularity of 'Pay as you drive' policies has surged, especially post-COVID-19, offering flexible, usage-based premiums.

5. Revised Policy Cancellation Rules

• Policies can only be canceled for established fraud, with a minimum 7-day notice.

• Statutory Motor Third Party Liability insurance cannot be canceled except in cases of double insurance or total loss.

• Refunds will be proportional to the unexpired policy period, provided no claims have been made.

6. "The new rules simplify cancellations, focusing on fraud while protecting policyholders from abrupt terminations," explains Abhishek Kumar, Founder of SahajMoney.com.

7. Mandatory IDV Disclosure

• Insurers must display the Insured Declared Value (IDV) calculation on their websites and in the Customer Information Sheet (CIS).

• A Product Management Committee (PMC) will approve IDV criteria and depreciation scales.

8. Customer Information Sheet (CIS)

• Insurers must provide a CIS for all auto insurance policies, detailing coverage, exclusions, claim procedures, and grievance redressal mechanisms.

• CIS must be acknowledged by policyholders in physical or digital form.