No respite for insurance policyholders

The government and the RBI have taken a host of measures so as to facilitate the bank customers in the ongoing testing time due to Covid-19. However, please don’t expect any big relief from your insurer in case you have taken any insurance policy.

Unlike banks, insurers, both life and non-life, have not taken any significant relief steps though, they have taken only small measures by extending their premium due dates of policyholders for a few days following the directions from the insurance regulator Insurance Regulatory and Development Authority of India (IRDAI).

For any deferment of premium payment for any non-life insurance policy, Section 64 (B) of the Insurance Act needs to be amended, which is not possible in the given circumstances. As per the rule, all the non-life insurance payments have to be made in advance and in full.

Soon after the nationwide lockdown, the Centre has immediately postponed several deadlines and announced relief measures for the common man in various areas due to the disruption of public activities. Nevertheless, the relief steps taken in the insurance front is not as much as other sectors, and the government will permit more relief actions for the common man only at a given point in time then when the Corona situation worsens further.

When contacted, IRDAI chairman Subhash Chandra Khuntia said that “We have already taken steps for this to ease pain of the policyholders. At this point in time, it is very difficult defer premium payments like loans in banks. We are monitoring the situation in consultation with central government and necessary steps would be taken as when required if the COVID-19 situation further worsens.”

It was on the same day of 21-day lockdown announcement, that the state-run life insurer, LIC, said that “In view of extraordinary circumstances prevailing in the country on account of COVID-19, LIC of India has announced relaxation to its policyholders in payment of premium due on in-force policies up to April 15, 2020.”

On its part, the IRDAI has only deferred the revision of the third-party (TP) motor liability after three days of lockdown announcement, saying that the orders will be effective until further orders.

The TP motor liability is the only insurance segment which is regulated by IRDAI.

It is not for the first time that the regulator has deferred the TP motor liability. Last year too it had deferred its revision of the premium to be underwritten under the segment for two months due to the general elections.

Every year, IRDAI revises the TP motor liability premium by 15-20 per cent on an average. But, the car or two-wheeler owners will have to pay their premium at the existing rates only until it was revised by the regulator.

So, this is the only relief for the policyholders in this regard at this crucial juncture,” said a motor insurance agent requesting not to be named.

In the meanwhile, private sector non-life insurer, IFFCO Tokio has announced some measures to ensure smooth claim settlement for its policyholders under health insurance and travel insurance categories, said Subrata Mondal, Executive Vice President, IFFCO-Tokio General Insurance.

“For health insurance, all our health insurance policies will cover the medical expenses incurred on hospitalisation for Coronavirus. At present, IFFCO-Tokio’s Health Insurance policies do not exclude epidemics and pandemics,” he said.

The company is not putting any limitations or restrictions on its health policies but tracking the situation closely, as it evolves based on WHO's declaration of COVID-19 being a pandemic.

On travel insurance, he said that “Our existing travel policyholders will continue to be covered for OPD and hospitalisation expense abroad, if they get infected while travelling and taking treatment for the same during their stay.”