Insurance regulator IRDAI on Wednesday proposed a standard personal accident product with common coverage and policy wordings across the industry, a move aimed at increasing penetration of the product.
"Every general and standalone health insurer, who has been issued a certificate of registration to transact general and/or health insurance business, shall mandatorily offer this product," said the draft guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI).
General and health insurers should offer the product from April 1, 2021 onwards. The insurance market is having a wide variety of personal accident insurance products, the draft said adding that each product has unique features and the insuring public may find it a challenge to choose an appropriate product.
"Therefore, with the objective of having a standard product with common coverage and policy wordings across the industry, the Authority has decided to mandate all general and health insurers to offer the standard personal accident insurance product," said the draft. The cover would offer protection against death, permanent disablement, or partial disablement due to accidents. The standard product would be offered with a policy term of one year. It would also cover expenses towards hospitalisation.
The draft, on which comments from stakeholders have been invited by December 18, said the standard product should have the basic mandatory covers. The covers should be uniform across the market. The insurer may determine the price keeping in view the covers proposed to be offered subject to complying with the norms, it said.
"Minimum sum insured shall be Rs 2.5 lakh and a maximum sum insured shall be Rs 1 crore," the draft said. Beyond that, insurers can offer on their own and can use the same name for the product if all terms and conditions remain the same, it added. On base covers, it proposed that benefit equal to 100 per cent of sum insured shall be payable on death of the insured person, due to an injury sustained in an accident during the policy period, provided that the insured person's death occurs within 12 months from the date of the accident.
Benefit equal to 100 per cent of sum insured has also been proposed in the case of 'permanent total disablement' subject to conditions. It further said following an admissible claim of the insured person under the policy towards death or permanent total disability of the insured person, "a one-time educational grant of 10 per cent of the base sum insured, each, shall be payable, for a maximum of two dependent children of the insured" subject to certain conditions.
Also, sum insured should be increased by five per cent in respect of each claim free policy year, provided that the policy is renewed without a break subject to maximum of 50 per cent of the sum insured. If a claim is made in any particular year, the cumulative bonus accrued may be reduced at the same rate at which it has accrued, IRDAI has proposed.