Non-life insurers want to halve breakup notice time to 15 days
If the General Insurance Council has its way, your insurer may have the right to terminate your cover at just 15 days’ notice, and that would include nearly all kinds of non-life covers, except mediclaim.
By Debjoy Sengupta, TNN |
KOLKATA: If the General Insurance Council has its way, your insurer may have the right to terminate your cover at just 15 days’ notice, and that would include nearly all kinds of non-life covers, except mediclaim. Similarly, if you are dissatisfied with your insurer, you may also have the option of cancelling the cover with a 15-day notice, though only if there haven’t been any claims.
Covers where this 15-day time limit has been proposed include fire, home insurance, motor, engineering insurance, property all risks policy and business interruption.
The General Insurance Council has prepared a set of standards for nearly all categories of insurance policies, excepting mediclaim, in which it has fixed a 15-day time limit for cancelling a policy. “This will now be vetted by the Insurance Regulatory & Development Authority (Irda) , and if thought fit, the 15-day norm will become a standard in the industry, along with the host of wordings we have prepared for general covers,” GIC secretary-general KN Bhandari told ET.
For instance, the draft wordings of the fire policy say a cover may be terminated at any time at the request of the insured, wherein, the insurer will retain the premium at the company’s short period rate for the time the policy has been in force. Short period is the actual duration the policy is in force before cancellation.
This insurance may also be terminated at any time at the option of the insurer, on 15 days’ notice to the policyholder. In this case, a general insurance company shall be liable to repay on demand a proportion of the premium for the unexpired term from the date of the cancellation. It is pretty much the same for all policies.
However, for motor third-party liability covers, which is mandatory by law, a policy can be cancelled only after ensuring the vehicle is insured elsewhere and after surrender of the original certificate of insurance for cancellation. In cases where the ownership of vehicle is transferred, the cover cannot be cancelled unless evidence the vehicle is insured elsewhere is produced.
“The general insurance industry has till now been using standard wordings for insurance policies that were prepared by the Tariff Advisory Committee (TAC). The industry has long been asking for a set of wordings prepared themselves. Accordingly, we have prepared a draft,” said Mr Bhandari.
“TAC’s wordings had stipulated 30 days’ time for cancelling a policy. This, the industry feels, is not suitable,” he added.
Covers where this 15-day time limit has been proposed include fire, home insurance, motor, engineering insurance, property all risks policy and business interruption.
The General Insurance Council has prepared a set of standards for nearly all categories of insurance policies, excepting mediclaim, in which it has fixed a 15-day time limit for cancelling a policy. “This will now be vetted by the Insurance Regulatory & Development Authority (Irda) , and if thought fit, the 15-day norm will become a standard in the industry, along with the host of wordings we have prepared for general covers,” GIC secretary-general KN Bhandari told ET.
For instance, the draft wordings of the fire policy say a cover may be terminated at any time at the request of the insured, wherein, the insurer will retain the premium at the company’s short period rate for the time the policy has been in force. Short period is the actual duration the policy is in force before cancellation.
This insurance may also be terminated at any time at the option of the insurer, on 15 days’ notice to the policyholder. In this case, a general insurance company shall be liable to repay on demand a proportion of the premium for the unexpired term from the date of the cancellation. It is pretty much the same for all policies.
However, for motor third-party liability covers, which is mandatory by law, a policy can be cancelled only after ensuring the vehicle is insured elsewhere and after surrender of the original certificate of insurance for cancellation. In cases where the ownership of vehicle is transferred, the cover cannot be cancelled unless evidence the vehicle is insured elsewhere is produced.
“The general insurance industry has till now been using standard wordings for insurance policies that were prepared by the Tariff Advisory Committee (TAC). The industry has long been asking for a set of wordings prepared themselves. Accordingly, we have prepared a draft,” said Mr Bhandari.
“TAC’s wordings had stipulated 30 days’ time for cancelling a policy. This, the industry feels, is not suitable,” he added.
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