Recently, the Government has raised the cap on foreign direct investment in the insurance sector from 26% to 49%, alongside other amendments in the law. The changes being long-awaited will now translate into higher benefits to the insured. Here are the five ways in which the new insurance rules will benefit people.
Claim Rejection Period:
Under the prior rules, an insurance company was given a period of two years to reject a claim on the ground of fraud or misstatement. After the lapse of such period, the insurance companies retained the power of rejecting claims. Now under new rules though the claim rejection period given to the insurance companies is raised to three years, but it no more allows a company to reject a claim beyond this time.
In order to curb fraudulent activities by the insured’s, the amended Insurance Act imposes a penalty of up to Rs. 1 crore on those committing the fraud. It is believed that the clause will help bring down the number of fraud cases in the country.
The amended insurance rules provide for convenient processing of claims. This means that now government will set up established agent channels in order to make the process of claim processing easy and hassle free. Also, the rules encourage a technology driven insurance sector, where online insurance processing is set to become more accessible and easier.
Agent Remuneration and Dependency:
The new rules will make policy takers less dependent on agents, who mostly try to sell a wrong product to a customer. The varying remuneration policies of agents earlier pushed them to market products that are not suitable for the clients. But new rules will help an individual make a better decision based on easily available market information.
Transfer of Policy Allowed:
One can now easily transfer a policy to a third-party, which comes in line with the global practices. The person to whom the policy is transferred has the right to either surrender the policy or obtain a loan from it.