IRDAI Regulations 2024: Comprehensive Overview of Policyholder Protection and Insurer Operations
5. Definitions applicable to Part A
Definitions applicable to Part A
Bare Act
Part 2 of 2
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(9) “Mis-selling”
includes sale or solicitation of policies by the insurer or through distribution channels, directly or indirectly by:
- a. exercising undue influence, use of dominant position or otherwise, or
- b. making a false or misleading statement or misrepresenting the facts or benefits, or
- c. concealing or omitting facts, features, benefits, exclusions with respect to products, or
- d. not taking reasonable care to ensure suitability of the policy to the prospects/policyholders.
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(10) “Proposal form”
means a form to be filled in by the prospect in physical or electronic form, for furnishing the information including material information, if any, as required by the insurer in respect of a risk, in order to enable the insurer to take informed decision in the context of underwriting the risk, and in the event of acceptance of the risk, to determine the rates, advantages, terms and conditions of the cover to be granted.
Explanation:
- (i) “Material Information” for the purpose of these regulations shall mean all important, essential and relevant information and documents explicitly sought by insurer in the proposal form.
- (ii) The requirements of “disclosure of material information” regarding a proposal or policy, apply both to the insurer and the prospect, under these regulations.
- (11) “Prospect” means any person who is a potential customer and likely to enter into an insurance contract either directly with the insurer or through the distribution channel involved.
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(12) “Prospectus”
means a document either in physical or electronic format issued by the insurer to sell or promote the insurance product.
Explanation: Insurance product referred herein shall also include the riders or add-on(s), if any. Where a rider or add-on is tied to a base policy, all the terms and conditions of the rider or add-on shall be mentioned in the prospectus. Where a standalone rider or add-on is offered to a base product, a reference to the rider or add-on shall be made in the prospectus of the base policy indicating the nature of benefits flowing thereupon.
- (13) “Solicitation” means the act of approaching a prospect or a policyholder by an insurer or by a distribution channel with a view to persuading the prospect or a policyholder to purchase or to renew an insurance policy.
- (14) “Unfair trade practice” shall have the meaning ascribed to such term in the Consumer Protection Act, 2019 , as amended from time to time.
- (15) All words and expressions used and not defined in these regulations, but defined in the Act, or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or the Insurance Rules, 1939 or any other regulations issued by the Authority shall have the meanings respectively assigned to them in those Acts or Rules or Regulations.
Simplified Act and examples below are previews.
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This section of the IRDAI Regulations, 2024, explains important terms related to insurance policies. Understanding these terms helps both insurers and customers know their rights and responsibilities. Key concepts include mis-selling, proposal forms, and the role of prospects in insurance contracts.
- (9) “Mis-selling” refers to the improper selling of insurance policie
Explanation using examples
Example 1: Mis-selling through Misrepresentation
Introduction: John, a 45-year-old teacher, is approached by an insurance agent, Sarah, who works for XYZ Insurance Company. Sarah persuades John to purchase a life insurance policy by claiming it will double his investment in five years, which is not true.
Application: This scenario falls under Section 5, Definition (9)(b) of the IRDAI Regulations, 2024, which defines "Mis-selling" as making a false or misleading statement or misrepresenting the facts or benefits. Sarah's false claim about the investment doubling constitutes mis-selling.
Outcome: If John purcha
