In order to address the ever changing COVID-19 pandemic situation in India, the Indian government has issued various notifications, including a nation-wide closure of all public and private establishments (with an exception for essential service providers) which has had a direct impact on the normal functioning of all entities, including those in the insurance sector.
With a view to ensure business continuity of Insurers and other insurance entities and ensuring proper service to policyholders, commencing March 2020, the Insurance Regulatory and Development Authority of India (IRDAI) has also issued directions on, inter alia, handling of COVID-19 claims, extension of grace periods for premium payment, relaxation of regulatory timelines and expeditious servicing of insurance policies.
An overview of the key notifications and guidelines issued by the IRDAI with respect to COVID-19 pandemic (as on 9 April 2020) is set out below:
Relaxation of Timelines
- The renewal dates of motor vehicle third party insurance policies and health insurance policies falling due between 25 March 2020 and 14 April 2020 (dates inclusive) have been extended until 21 April 2020 by the Ministry of Finance1. It is relevant to note that the IRDAI had previously by way of a notification of 23 March 2020, extended the renewal date for health insurance policies by a period of 30 days2.
- The grace period for life insurance policies falling due for renewal in the month of March and April 2020 has been extended by 30 days3.
- Insurers have been given a relaxation of 30 days for the dispatch of documents for policies issued between 15 March and 30 April 2020. With respect to 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 redressal of complaints pertaining to COVID-19, the extant timelines will continue to apply4.
- Insurers have been provided additional time of 15 days for filing of monthly returns and of 30 days for filing of quarterly, half-yearly, and annual returns, and the cyber security audit report, due as on 31 March 20205. The deadline for filing of reinsurance programme by Insurers for the financial year 2020-21 has also been extended by one month to 31 May 20206.
- Insurance intermediaries have been provided an additional time period of 15 days for filing of monthly returns and an additional time period of 30 days for filing of quarterly returns falling due in March 20207.
- In respect of term loans issued, Insurers may grant a moratorium period of three months towards payment of instalments falling due between 1 March 2020 and 31 May 2020. The re-scheduling of payments, including applicable interest, will not qualify as a default for the purpose of reporting of NPAs. Insurers are required to 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 are required to confirm such compliance8.
- Claims under COVID-19 are required to be handled expeditiously and reviewed by the claims review committee of the Insurer before repudiation. Indemnity based health insurance products providing coverage for the hospitalization treatment costs (including the standalone "Arogya Sanjeevani Policy" health insurance product) are expressly required to cover the costs of hospitalization treatment incurred on account of COVID -199.
- With respect to unit linked policies maturing by 31 May 2020, where fund value is to be paid in lumpsum, Life Insurers have been permitted to offer settlement options in accordance with the erstwhile R25 of the IRDA (Linked Insurance Products) Regulations 2013, regardless of whether such option exists under the specific product10. In terms of such settlement options, Life Insurers are also required to exercise all due diligence and clearly explain the possible risk of continued fluctuation of fund value based on daily NAV, and obtain the clear consent of the policyholder.
- Insurers are required to display certain information on their websites, including, inter alia, information regarding the functioning of the Insurer's offices, alternate arrangements made for premium payments, policy renewals, settlement of claims and lodging of other service requests and FAQs for COVID-19 claims11. Life Insurers are required to provide information on admissibility or other relevant information with respect to COVID-19 death claims/health insurance claims, for all insurance products on their website12.
- Insurers are required to 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 is to be displayed on the Insurers' websites13.
- Insurers are required to put in place a business continuity plan, and set up a crisis management committee comprising of their key personnel to monitor the current situation on a real time basis. Insurers are also required to undertake precautionary measures to address cyber risks, including educating their staff of the possible cyber risks and the associated safeguards14.
- Insurers are required to inform the IRDAI in case of any special circumstances affecting their essential business operations or capital requirements or solvency margin15. Life Insurers are required to maintain data in respect of claims related to COVID-19 and submit a fortnightly report to the IRDAI providing details of offices fully/partially closed, duration, and steps taken in this regard16.
- 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 process17.
- The IRDAI has instructed Insurers to make special efforts to enable digital methods of premium payment and educate policyholders through SMS, emails, etc. In addition, Insurers have been directed to issue policy documents through email within the prescribed period, and where such email addresses are not available, 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 servicing18.
- With respect to travel insurance policies valid between 22 March 2020 and 30 April 2020, policyholders are required to be provided with an option to defer the date of travel, without any additional charge19.
- The premium rates for motor third party liability insurance, as notified for FY 2019-20, have been extended to the FY 2020-21 until further notice20.
Given the unprecedented nature of the present crisis, the IRDAI as the sectoral regulator has proactively issued various instructions to ensure continuity of Insurers' operations and provided relaxations with respect to filings, disclosures and/or 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 present pandemic, and development of a speedier settlement process for COVID-19 claims.
It is interesting to note that that multiple insurance brokers are reported to have approached the IRDAI requesting for a similar relaxation of premium deadlines for general insurance policies also, in light of the ongoing pandemic situation. 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.
1 Central Government's notification SO 1237(E) and SO 1238(E) dated 1 April 2020; 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 COVID 19 situation" of 2 April 2020 and of 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 COVID 19 situation" of 2 April 2020 and of 3 April 2020.
2 Press release re "To ensure proper service to policyholders and customers" of 23 March 2020.
3 Circular on "Global Pandemic Covid19 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 (Re-insurance) Regulations, 2018" of 28 March 2020.
7 Supra note 2.
8 Circular on "Rescheduling of Term Loans in the context of outbreak of Covid-19" of 8 April 2020.
9 "Guidelines on handling of claims reported under Corona Virus" 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.
17 Supra note 15.
20 Order re "Premium Rates for Motor Third Party Liability Insurance Cover" of 27 March 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.