Life insurance policies to have common format

MUMBAI: If you’re fed up of trying to decipher jargon spouted by different life insurance companies, you may get a breather soon. The Insurance Regulatory and Development Authority (Irda) has roped in National Insurance Academy (NIA), Pune, and other members from the life insurance industry to work out a common format and language for life insurance players.

Based on feedback from consumer courts, insurance ombudsman and customers, Irda has mandated NIA director KC Mishra to head the ‘harmonisation of documentation of the life insurers committee'.

"Each foreign partner of the insurance players has brought in their own definitions, language and procedures to the Indian market. This has led to confusion in the customer's mind and made it difficult to understand and compare products. We plan to change this," says Mishra, NIA director.

The committee, formed two weeks ago, has already obtained documentation from most life insurers. It is in the process of compiling the information and will now find a way to simplify the procedures and language to bring down the policy and proposal document to just two.

Currently, in the market there are close to 300 types of policy and proposal documents. It will then submit an exposure draft to all the insurance players by mid-August and submit a draft of the guidelines to Irda by August 31.

The plan will ensure that every player follows the same format of documentation as well the same language. To begin with, only linked and conventional life insurance products be covered under the plan.

“It’s a fairly complex procedure because information in 300-odd documents has to be brought down to two. So we’d like to tackle life insurance first,” says Mishra.

Though Irda has asked the committee to restrict the format to two documents, Mishra says in all probability it will be brought down to four. Within the four documents, the committee is hoping to ensure that each document is only one page.