New measures from the IRDAI are set to deter travel insurance mis-selling

The new regulation imposed by the IRDAI, which applies where policies are offered under group platforms or through any travel agency or portal, states: “Insurers shall ensure that any portal or app providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. The circular shall come into force with immediate effect. All the group insurance arrangements that are not in compliance with these norms shall be terminated with effect from 1 October 2019.” The new move that aims to curb travel insurance mis-selling and improve policy transparency.

The new regulation imposed by the IRDAI, which applies where policies are offered under group platforms or through any travel agency or portal, states: “Insurers shall ensure that any portal or app providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. The circular shall come into force with immediate effect. All the group insurance arrangements that are not in compliance with these norms shall be terminated with effect from 1 October 2019.”

In addition, customers will not be allowed to buy travel insurance along with their travel ticket if they buy domestic travel tickets 90 days or more before the commencement of the journey. The IRDAI noted that travel insurance for international travel could be issued at any time.

"Considering that the changes come in the backdrop of the travel insurance business for the industry gaining momentum, the move of providing those booking tickets with the confirmation option of whether they (the purchasers) want the cover or not is a welcome step,” said Gurdeep Singh Batra, Head – Retail Underwriting, Bajaj Allianz General Insurance. “The consumer will not only be aware of what he is buying but also get to read the terms and conditions and agree to them. The norms will bring in greater transparency for the insured and insurer and also curb mis-selling."

In line with the new policy, the IRDAI dictates the following norms:

• Insurers are responsible to ensure an informed choice to the persons to be insured and ensure compliance to Regulation 6 of IRDAI (Protection of Policyholders' Interests) Regulations, 2017.
• The name of the insurance company which is offering the travel insurance cover and the amount of the premium that shall be collected towards travel insurance cover shall be specifically disclosed as the cost of travel cover, at the time of opting to buy a travel insurance cover.
• Insurers shall ensure that any portal or app providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. The prospect shall be able to specifically choose whether to buy the coverage.
• Where selected to buy, an option shall be provided for opting out or de-selecting the option before concluding the transaction.
• There shall be a provision to let the person to be insured buying a travel cover go through the benefits, terms and conditions offered under the travel insurance cover on the screen itself and consent shall be obtained in the form of selecting a radio button by the prospect /policyholder in confirmation of having read and understood the terms and conditions.
• In order to ensure that every travel policy offered is in compliance with these norms, there shall be a clause in the agreement entered with the master policyholder and in the terms and conditions of the group policy along with a provision to cancel the group policy arrangement if the master policyholder is not adhering to the norms specified.

The new regulation, along with the norms associated with it, is issued under the provisions of Section 34 (1) of the Insurance Act, 1938, according to the IRDAI circular. Insurers are instructed to put procedures in place to verify that at least once in a period of three months, the travel policies offered comply with the norms.