In a move to bring transparency in the online buying and selling of travel insurance products, the Insurance Regulatory and Development Authority (IRDAI) has directed insurers to ensure that the travel insurance coverage option is not pre-selected as a default option. The move, which has been made effective immediately, has also made it mandatory that the premium cannot be bought along with tickets bought 90 days before the date of travel.
The IRDAI’s circular dated on September 27, 2019, stated, “lnsurers shall ensure that any portal or app providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. All the group insurance arrangements that are not in compliance to these norms shall be terminated with effect from October 1, 2019.”
IRDAI has issued the norms under the provisions of Section 34 (1) of the Insurance Act, 1938. Here are a few important highlights:
- The amount of the premium shall be disclosed at the time of buying a travel insurance cover
- Rate of tax that is applicable to the premium shall be separately specified
- The prospect shall be able to specifically choose whether or not to buy the coverage
- There shall be a provision to let the person to be insured go through benefits, terms and conditions offered under the travel insurance cover on the screen itself
Further, the IRDAI has asked insurers to put in place procedures at least once in a period of three months to verify the travel policies offered are complying with the norms.
Commenting on the prospects, Gurdeep Singh Batra, Head (Retail Underwriting), Bajaj Allianz General Insurance, said, “Though domestic travel insurance remains a small portion of the business, the new norms announced by IRDAI will benefit both the insured and the insurers. Considering that the changes come in the backdrop of the travel insurance business for the industry gaining momentum, the move of providing those booking tickets the option of whether they want the cover or not is a welcome step.”
“The consumer thus will not only be aware of what he is buying, but also get to read the terms and conditions and agree to them. The norms will bring in greater transparency for the insured and insurer and also curb mis-selling,” he added.