In order to address the ever-changing COVID-19 pandemic in India, the government has issued various notifications, including a nationwide closure of all public and private establishments (except for essential service providers), which have had a direct impact on the normal functioning of entities, including those in the insurance sector.
In order to ensure the business continuity of insurers and the provision of proper services to policyholders, commencing in March 2020, the Insurance Regulatory and Development Authority of India (IRDAI) issued directions on, among other things:
- the handling of COVID-19 claims;
- the extension of grace periods for premium payment;
- the relaxation of regulatory timelines; and
- the expeditious servicing of insurance policies.
This article provides an overview of the key notifications and guidelines issued by the IRDAI with respect to the COVID-19 pandemic (as at 9 April 2020).
The renewal dates of motor vehicle third-party insurance policies and health insurance policies falling due between 25 March 2020 and 14 April 2020 (inclusive) were extended until 21 April 2020 by the Ministry of Finance.(1) Notably, the IRDAI had previously by way of a notification of 23 March 2020, extended the renewal date for health insurance policies by 30 days.(2)
The grace period for life insurance policies falling due for renewal in March 2020 and April 2020 has been extended by 30 days.(3)
Insurers have been given a relaxation of 30 days for the dispatch of documents for policies issued between 15 March 2020 and 30 April 2020. With respect to the redressal of policyholders' grievances received between 15 March 2020 and 30 April 2020, an additional period of 21 days has been provided to insurers for responding to these complaints. However, for the redressal of complaints pertaining to COVID-19, the existing timelines will continue to apply.(4)
Insurers have been provided an additional 15 days for filing their monthly returns and 30 days for filing their quarterly, half-yearly and annual returns and the cybersecurity audit report, which was due on 31 March 2020.(5) The deadline for filing reinsurance programme by insurers for the financial year 2020-2021 has also been extended by one month to 31 May 2020.(6)
Insurance intermediaries have been provided an additional 15 days for filing their monthly returns and 30 days for filing their quarterly returns which fell due in March 2020.(7)
In respect of term loans issued, insurers may grant a moratorium of three months towards payment of instalments which fell due between 1 March 2020 and 31 May 2020. The rescheduling of payments, including applicable interest, will not qualify as a default for the purpose of reporting of non-performing assets. Insurers must frame board-approved policies to extend such relief measures to all eligible borrowers. Concurrent auditors of insurers in their reports for the quarter ending June 2020 must confirm such compliance.(8)
Claims under COVID-19 must be handled expeditiously and reviewed by the claims review committee of the insurer before repudiation. Indemnity-based health insurance products providing coverage for the hospitalisation treatment costs (including the standalone 'Arogya Sanjeevani policy' health insurance product) must cover the costs of hospitalisation treatment incurred due to COVID-19.(9)
With respect to unit-linked policies which matured by 31 May 2020, where fund value is to be paid in a lump sum, life insurers have been permitted to offer settlement options in accordance with the former Regulation 25 of the IRDA (Linked Insurance Products) Regulations 2013, regardless of whether such option exists under the specific product.(10) In terms of such settlement options, life insurers must exercise all due diligence and clearly explain the possible risk of continued fluctuation of fund value based on daily net asset value and obtain the policyholder's clear consent.
Insurers must display certain information on their websites, including information regarding:
- the functioning of the insurer's offices;
- alternate arrangements made for premium payments, policy renewals, settlement of claims and the lodging of other service requests; and
- FAQs for COVID-19 claims.(11)
Life insurers must provide information on admissibility or other relevant information with respect to COVID-19 death claims and health insurance claims for all insurance products on their website.(12)
Insurers must have a dedicated helpline for policyholders and another helpline for other stakeholders. The details of the helpline number along with the contact number of the officer for escalation must be displayed on insurers' websites.(13)
Insurers must establish a business continuity plan and a crisis management committee comprising their key personnel to monitor the current situation on a real-time basis. Insurers must also undertake precautionary measures to address cyber risks, including educating their staff of the possible cyber risks and the associated safeguards.(14)
Insurers must inform the IRDAI if any special circumstance affects their essential business operations, capital requirements or solvency margin.(15) Life insurers must maintain data in respect of claims relating to COVID-19 and submit a fortnightly report to the IRDAI providing details of the offices that are fully or partially closed, the duration of such closure and the steps taken in this regard.(16)
Insurers have been advised to design appropriate insurance products covering costs and providing protection from risks arising out of COVID-19. The IRDAI has clarified that such products will be approved under a fast-track process.(17)
The IRDAI has instructed insurers to make special efforts to enable digital methods of premium payment and educate policyholders through SMS and email. In addition, insurers have been directed to issue policy documents through email within the prescribed period and, where such email addresses are unavailable, insurers may also use SMS. In this regard, insurers have been encouraged to capture the email and phone number of all prospective customers for further policy servicing.(18)
With respect to travel insurance policies valid between 22 March 2020 and 30 April 2020, policyholders must be provided with an option to defer the date of travel, without any additional charge.(19)
The premium rates for motor third-party liability insurance, as notified for the financial year 2019-2020, have been extended to the financial year 2020-2021 until further notice.(20)
Given the unprecedented nature of the COVID-19 crisis, the IRDAI as the sectoral regulator has proactively issued various instructions to ensure the continuity of insurers' operations and provided relaxations with respect to filings, disclosures and timeline-related compliances under the insurance regulatory framework. The IRDAI has also taken measures for safeguarding the interests of policyholders, such as a fast-track product approval for insurance products specifically designed for the COVID-19 pandemic, and the development of a speedier settlement process for COVID-19 claims.
Multiple insurance brokers are reported to have approached the IRDAI requesting a similar relaxation of premium deadlines for general insurance policies in light of the ongoing pandemic. At present, the IRDAI has not issued any express guidance with respect to general insurance policies for extension of renewal dates due in April 2020.
Endnotes
(1) Government notifications SO 1237(E) and SO 1238(E) of 1 April 2020; the IRDAI's circulars on "Premium payment for renewal of Health Insurance policies falling due during the lockdown period (25th March 2020 to 14th April 2020) as a result of the COVID-19 situation" of 2 April 2020 and 3 April 2020; and "Premium payment for renewal of Motor Third-Party Insurance policies falling due during the lockdown period (25th March 2020 to 14th April 2020) as a result of the COVID-19 situation" of 2 April 2020 and 3 April 2020.
(2) Press release re "To ensure proper service to policyholders and customers" of 23 March 2020.
(3) Circular on "Global Pandemic COVID-19-related Instructions to Life Insurers" of 4 April 2020.
(4) Circular on "COVID-19-related instructions" of 30 March 2020.
(5) Circular on "Additional Time allowed for Filing Regulatory Returns" of 4 April 2020.
(6) Press release re "Relaxation of timelines for certain provisions of the IRDAI (Reinsurance) Regulations 2018" of 28 March 2020.
(8) Circular on "Rescheduling of Term Loans in the context of the COVID-19 outbreak" of 8 April 2020.
(9) "Guidelines on handling of claims reported under COVID-19" of 4 March 2020; Press release re "Arogya Sanjeevani Policy" of 1 April 2020.
(10) Ibid; "FAQs on Settlement Options under Unit-Linked Life Insurance Plans (ULIPs)" of 7 April 2020.
(11) Circular on "COVID-19-related instructions" of 30 March 2020.
(12) Circular on "COVID-19 Global Pandemic Related Instructions to Life Insurers" of 23 March 2020.
(13) Circular on "COVID-19-related instructions" of 30 March 2020.
(15) Circular on "COVID-19-related instructions" of 30 March 2020.
(16) Circular on "COVID-19 Global Pandemic Related Instructions to Life Insurers" of 23 March 2020.
(20) Order re "Premium Rates for Motor Third-Party Liability Insurance Cover" of 27 March 2020.
