IRDAI acts tough on mis-selling of travel insurance, how new norms will benefit you

IRDAI is continuing to bring in changes in the way the insurance companies treat their customers. The lack of transparency and the complaints of mis-selling policies by the companies has forced the regulator to act tough and keep issuing new guidelines. The latest relates to travel insurance policies particularly sold by most of the online ticketing apps.

Ordinary customers are attracted by the kind of discounts etc. offered by these apps for booking their travel tickets and hotel stays. While presenting the final checkout form, these apps have a default option where the travel insurance gets automatically ticked and the customer is hardly aware that he or she has chosen that option. It is only later that they realise they have paid the premium for a travel insurance policy they might never have wanted in the first place. More significantly, the customer gets no choice of the insurance company or the sum insured etc. The premiums may be low, but the coverage value is very small as well. Even the premium added to the ticket value is not properly reflected in the invoice. All these have to end.

IRDAI's new regulations, which have already come into force from October 1, mandate that any travel services provider cannot pre-select the insurance option on their app. For domestic travellers, the policy cannot be issued before 90 days of the journey date while for international travel, such time restrictions won't apply. The portal offering the ticketing services will have to clearly specify the cost of the insurance policy they are offering along with the ticket.

The new rules further mandate that the customer must be made aware of the full terms and conditions of the travel insurance policy being issued to him/her and the final option of saying yes or no will remain with the customer. The insurers have to add a confirmation on the portals that the travel insurance policies being offered on the platform are in compliance with the new IRDAI rules. All these ultimately are meant to make the process of buying an insurance policy transparent and the customer gets to choose what he or she wants.

Source: The News Minute