Changes in Policy Wording will Lead to Simpler Products

Commercial Insurance cover will become more broad-based and simpler, due to the proposed changes in the policy wordings. The General Insurance Council, a representative body of general insurers, health insurers and re-insurers in the country, has recommended changes in the standard fire and special perils insurance policy for commercial risks. IRDAI had in February 2016 asked the council to develop industry standard product wordings to be adopted by the insurers for commercial risks. On the basis of a series of discussions held with its member insurers, the council has now come up with recommendations. “Keeping protection of policyholders’ interests in focus, the expert group has recommended certain modifications/ amendments to the extant policy wordings to bring in more clarity in wordings and for removal of ambiguities and to reduce litigation,” R Chandrasekaran, Secretary General, General Insurance Council, said in a communication to stakeholders. For example, it had recommended the complete list of perils covered in standard fire and special perils (material damage) policy. The 12 perils, including fire, lightning, explosion/implosion, aircraft damage, riot, strike, and malicious damage, missile testing operations and bush fire, with their definition and exclusion have been mentioned. The objective is “to bring clarity with respect to the list of named perils covered in the policy,” the council mentioned in the synopsis of the proposed changes. With reference to indemnity, more clarity has been suggested by introducing the limit of indemnity as a separate sub-head in the policy. Also, the key aspects of cancellation of policy and norms pertaining to premium are proposed to be made more transparent in line with the recent provisions of IRDAI in the Protection of Policyholders Interests Regulation 2017. The general conditions given in policy wordings too are now more well-defined and broad-based. According to a senior IRDAI official, the regulator will take a view once the final recommendations are sent by the council after receiving feedback from stakeholders.