Claimed insurance? Health, motor covers will sting you

Get ready to pay more for your health or motor insurance covers if you have made a claim in the past.

The Insurance Regulatory and Development Authority (Irda) has proposed a new set of rules, effective from March 2014, giving general insurers the leeway to charge differential prices for motor and health plans, based on individual claims experiences. So, if you have made a claim, you end up paying more.

“Pricing is a function of product feature and the risk perceived by insurers after taking into various factors. Differential pricing will benefit customers as there will be a wide difference between policyholders who made claims and who didn’t,” said Sampath Kumar, chief financial officer, Bharti Axa General Insurance.

On the other hand, at least theoretically, you could be paying less if there is no claim against your name.

The Irda has also proposed that insurers to set aside more capital for policies where the risk is higher — mainly those offering guaranteed returns.

In an exposure draft put out on Thursday, it said it has decided to move from the current factor-based pricing regime to one based on solvency. Accordingly, life insurance policies offering guaranteed returns will require higher solvency margins, or more capital, to be set aside. This will push up premiums for traditional products, said a senior actuary.

However, unit-linked policies will be less expensive as insurers need to set aside less capital against them.

IRDA comes out with framework for monitoring insurance frauds

 The regulator has asked insurance companies to lay down procedures to carry out the due diligence on the personnel and submit a compliance report before June

New Delhi: the Insurance Regulatory and Development Authority (IRDA) has come out with a framework for monitoring frauds in the insurance sector and asked insurers to carry out due diligence on their staff, including agents, reports PTI.

Stating that such fraud reduces consumer and shareholder confidence and can affect the reputation of individual insurers and the insurance sector as a whole, IRDA asked insurers to lay down procedures for monitoring and early detection of frauds.

“Lay down procedures to carry out the due diligence on the personnel (management/staff)/ insurance agent/ corporate agent/ intermediary/ TPAs before appointment with them,” IRDA said in a circular to all insurance companies.

The insurers have to submit a compliance report with the regulator by 30 June 2013.

 “It is required that insurers understand the nature of fraud and take steps to minimise the vulnerability of their operations to fraud,” IRDA said.

It asked insurance companies to ensure that the risk management function is organised in such a way that the insurer is able to monitor all the risk and take steps to address them.

IRDA classified frauds in the insurance sector under three heads—claim fraud or policyholder fraud, intermediary fraud and internal fraud.

It also asked the insurance companies to frame an anti-fraud policy and said that the company’s board would review the policy on an annual basis.

The insurer shall inform both potential and existing clients about its anti-fraud policies, IRDA said, adding that the insurer has to highlight the consequences of submitting a false statement for the benefit of policyholder in the insurance contract.