IRDA Issues Guidelines on ‘Orphan’ Insurance Policies

Many policyholders complain that the insurance agent who sold them the policy is no longer with the insurer and their policy is not being serviced due to termination of the agent by the insurer. So, whenever an insurance agent leaves the company, their policies secured by the agent are left behind ‘orphaned’.

IRDA has issued guidelines for such orphan policies to fill the gap created by the exit or termination of an insurance agent and also to promote the persistence of insurance policies.

IRDA allowed insurance companies to allot any of the lapsed ‘orphan’ life insurance policy to other insurance agent whose licence is in force for rendering effective service to the insurance policyholder. Under the guidelines, the policies which are not eligible for allotment are the single premium life insurance policy or life insurance policy on which no further premiums are due for payment. The life insurance products which are designed with specific marketing features like online or direct marketing where no commission is allotted to the agent are also not eligible for allotment.

The insurance regulatory said that life insurance companies should notify the details/particulars of the newly-allotted agent to the policyholders concerned. The allotted agent must be provided with all the details of the life insurance policies along with the addresses for policy servicing. These guidelines for the insurers will come into force with an immediate effect.

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