IRDA to Introduce Standard Proposal Form for All Life Insurers

To bring in uniformity in information Insurance Regulatory and Development Authority (IRDA) has proposed a standard proposal form for all life insurers. It will be mandatory for all life insurers to adopt the proposals. These guidelines will be implemented from first September 2012.

In its circular IRDA has proposed to mandate revised proposal form for life insurers in respect of individual policies. These regulations are aimed to provide standard proposal form for individual policies in life insurance that has an inbuilt flexibility for seeking additional information that is product-specific or specific to a particular risk category.These regulations are issued in terms of the powers vested upon the IRDA under section 14(B) of IRDA act 1999.
The objective of the regulation is to introduce standard proposal that not only brings uniformity in information sought but also ensures that it takes into consideration all relevant questions that are required to understand the need for a particular product and make the recommendation to the prospect that is based on Suitability in a simple and straightforward manner bringing transparency and thereby protecting policyholder’s interest.
These regulations will require insurers to have in place a process and system to assess the needs and analysis is carried out for each and every proposal received and soundness of the recommendation about a particular product.
As per the draft guidelines an agent or a broker has to make a declaration that a product that he has recommended is suitable to the buyer based on the information submitted by the buyer. A buyer also has to provide an acknowledgement that agent or broker explained the features of the policy and it suits his needs.

According to IRDA’s prescribed format, details of the prospect, need of the prospect and agent’s recommendations are the three mandatory categories in the form. Specialized information category is mandatory but can be modified by the insurer as required.