IRDAI Issued Guidelines on the Standard Personal Accident Insurance Product
The Insurance Regulatory and Development Authority of India or IRDAI, by way of Notification No IRDA/ HLT/ GDL/ MISC/ 036/ 02/ 2021, issued on 25.02.2021, has notified Guidelines on the Standard Personal Accident Insurance Product. The said guidelines are divided into four parts, as follows:
- Guidelines on the Standard Personal Accident Insurance Product;
- Annexure – 1: Policy Terms and Conditions for the Insurance Product;
- Annexure – 2: Format for the Customer Information Sheet;
- Annexure – 3: Form for furnishing the Standard Personal Accident Insurance Product;
In this learning blog, we will talk about the concept of IRDAI, together with the Guidelines on the Standard Personal Accident Insurance Product.
Concept of IRDAI
The IRDAI or Insurance Regulatory Development Authority of India is the apex regulatory authority that governs the operations of the Insurance Sector and administers the activities of both Life Insurance and General Insurance Companies.
Further, the main objective of this authority is to protect and safeguard the interests of the policyholder. Also, the same aims to infuse transparency, accountability, and financial soundness in the Insurance sector.
Moreover, it shall be noteworthy to take into consideration that not only insurance companies but all the insurance web aggregators and insurance brokers need to obtain a license from the IRDAI to commence their operations.
Reasons for Issuing Guidelines on the Standard Personal Accident Insurance Product
The Indian Insurance Sector is having a wide range of personal accident insurance products. However, it shall be noted that each product has its unique features and benefits, which makes it challenging for the insuring public to choose a suitable product matching their needs.
Thus, with the purpose of having a standard product with common policy wordings and coverage across the industry, the IRDAI has decided to obligate all the general and health insurers to provide the standard personal accident insurance product.
Further, it shall be noted that such guidelines are issued under the provisions of section 34 (1) (a) of the Insurance Act 1938.
The standard insurance product shall include all the basic mandatory covers as mentioned in these Guidelines. The same will be uniform across the market. However, the optional covers as prescribed will only be offered, together with the standard insurance product.
Moreover, every General & Standalone Health Insurer, who has been granted a Registration Certificate to transact General and/ or Health Insurance Business, will compulsorily need to offer standard Individual Personal Accident product. Also, the said product is permitted to be offered as a group product as well.
Mode of Determine the Pricing for Insurance Product
An insurance company can determine the price of an Insurance Product by considering the offers proposed and by complying with the norms and conditions prescribed by the IRDAI (Health Insurance) Regulations 2016 and the rules made thereunder. Further, it shall be noted that such a standard product will remain valid for a period of one year.
Also, the regulations that the standard personal accident insurance product needs to comply with are as follows:
- IRDAI (Health Insurance) Regulations 2016;
- Consolidated Guidelines on Product filing in Health Insurance Business, Reference No: IRDAI/ HLT/ REG/ CIR/ 194/ 07/ 2020, issued on 22.07.2020;
- Master Circular on the Standardization of Health Insurance Products, Reference No: IRDAI/ HLT/ REG/ CIR/ 193/ 07/ 2020, issued on 22.07.2020;
- Any other Guidelines as made applicable from time to time;
Construction of Standard Personal Accident Insurance Product
The covers offered by the Standard Personal Accident Insurance Product are as follows:
The different covers included under the heading Base Covers are as follows:
This cover provides benefit up to 100% of the Sum Insured, which shall be payable on the demise of the insured person. The term demise means an accident that happened due to which the insured suffered an injury, and during the policy period. However, it shall be noted that such death must happen within 12 months, starting from the date of accident.
Permanent Total Disablement
This cover provides benefit up to 100% of the Sum Insured, which shall be payable if the insured suffers from Permanent Total Disablement due to an accident that happened during the policy period. However, it shall be noted that such Permanent Total Disablement must happen within 12 months, starting from the date of the accident.
Further, the term Permanent Total Disablement includes the factors as follows:
- Total and Irrecoverable Sight Loss of both eyes, or;
- Physical Loss of use or Separation of both hands or feet, or;
- Physical Loss of use or Separation of one hand and one foot, or;
- Sight Loss of one eye and Physical Loss of use or separation of hands or feet, or;
- If such an Injury is as a direct consequence thereof, which permanently, and totally, disables an insured person from carrying out activities in any employmentor occupation of any nature or description whatsoever;
Permanent Partial Disablement
The Sum Insured mentioned below will be payable if in case the Insured Person suffers a Permanent Partial Disablement of the nature prescribed below. The same is solely and directly because of an accident that happened during the Policy Period. However, it shall be noted that such Permanent Partial Disablement must happen within 12 months, starting from the date of the accident.
|S.no.||Loss Covered||Percentage of the Sum Insured|
|Loss of Use or Physical Separation: one entire hand;one entire foot;loss of sight of one eye;loss of toes – all;great both phalanges;great – one phalanx;if more than one toe is lost;||50% 50% 50% 20% 5% 2% 1%|
|Loss of use of both ears;||50%|
|Loss of use of one ear;||20%|
|Loss of thumb and four fingers of one hand;||40%|
|Loss of four fingers;||35%|
|Loss of thumb: – both phalanges; – one phalanx;||25% 10%|
|Loss of Index finger: three phalanges; two phalanges; one phalanx;||10% 8% 4%|
|Loss of middle finger: three phalanges; two phalanges; one phalanx;||6% 4% 2%|
|Loss of ring finger: three phalanges; two phalanges; one phalanx;||5% 4% 2%|
|Loss of little finger: three phalanges; two phalanges; one phalanx;||4% 3% 2%|
|Loss of metacarpus: first or second (additional); third, fourth, or fifth (additional);||3% 2%|
|Any other form of permanent partial disablement||Percentage of sum assured as assessed by an independent Medical Practitioner|
The different covers included under the heading Optional Covers are as follows:
Temporary Total Disablement
If in case an Insured Person suffers an Injury in an accident happened during the Policy Period, which completely incapacitates him/ her from engaging in any sort of employment or occupation of any nature or description whatsoever which he/ she was capable of performing at the time of the accident (Temporary Total Disablement), then, in that case, compensation will be payable, at the interest rate of 0.2% of the base sum insured per week. Also, the same will be applied till the time the said person is able to return to his/ her work, provided that:
- Such a period of temporary total disablement must exceed 4 weeks. However, it shall be noted that the benefit will be payable for the whole duration of disablement;
- The compensation payable for this benefit,as mentioned under section11 (a), must be payable only up to 100 weeks in regard to anyone injury determined from the date of the commencement of disablement. Also, it shall be noted that the same in no case shall exceed the Sum Insured;
- The Temporary Total Disablement must be certified in writing by the treating Medical Practitioner that the same has commenced within a period of 30 days from the date of the Accident;
- The compensation payable will be paid by the insurer at quarterly intervals, only after determining the amount payable. However, if in case the period of temporary total disablement is for less than three months or a quarter, then, in that case, the compensation may be paid after the completion of the disablement period;
- At the time of making payment, the insurance company will have the right to call for certification from an independent medical practitioner with regard to the continuity of the temporary total disability denoted under this section;
Hospitalisation expenses arising due to the accident happened shall be reimbursed up to the limit of 10% of the base sum insured.
However, it shall be noted that expenses on Hospitalisation are only admissible after a minimum period of 24 hours. Further, thesaid time limit of 24 hours will not be applicable when the treatment does not need hospitalisation as prescribed in the terms and conditions of the policy contract. That means the treatment of the insured is taken in the Hospital, and he/ she is discharged on the very same day.
Also, the following expenses that occurred due to injury will be covered under the optional covers specified under the provisions of section 11(b):
- Dental Treatment;
- Plastic Surgery;
- All the daycare treatments;
- Expenses incurred on a road Ambulance subject to a maximum limit of Rs 2000/- perhospitalization;
Following an admissible insurance claim of an insured person under the policy in consequence of Death or Permanent Total Disability of the said person, a one time Educational Grant of 10% of base sum insured, per child, will be payable to all the dependent children of the said Insured. However, it shall be noted that:
- Such Dependent Child or Children is/ are pursuing a full time educational course as a student in an educational institution;
- Age of the said child or children as the case will not be above 25 completed years;
Terms and Conditions of Standard Personal Accident Insurance Product
The different terms and conditions of the Standard Personal Accident Insurance Product are as follows:
- All the Terms and Conditions of the Policy Standard Product will be in the format prescribed in Annexure – 1. However, it shall be noted that an insurer can suitably modify the definitions and clauses of the said policy contract prospectively on the basis of the Guidelines or Regulations that may be issued by the IRDAI from time to time;
- The Insurers are permitted to use the name of the standard product for the group policy just by adding the term “group”. However, it shall be noted that the benefit structure of the said standard policy remains intact except the premium rate and of terms and conditions appropriate to group policy;
Miscellaneous Provisions of Standard Personal Accident Insurance Product
The miscellaneous provisions of the Standard Personal Accident Insurance Product are as follows:
- The nomenclature of the insurance product will be “SaralSurakshaBima”, succeeded by the name of the insurance company. Also, it shall be noted thatno othername is permitted in any of the documents;
- The Proposal Form used for the insurance product must be subject to the terms and conditions prescribed under the “Consolidated Guidelines on Insurance Product Filing in Health Insurance”;
- It shall be noted that all the Insurers will mandatorily issue “Customer Information Sheet” as per the format prescribed in Annexure – 2;
- The Standard Personal Accident Insurance Product will be launched without any prior approval from the Authority. However, the same will be subject to the conditions and stipulations as follows:
- The insurance product will be approved by the PMC (Product Management Committee);
- Insurers need to obtain UIN (Unique Identification Number) for the standard personal accident insurance product. The same will be acquired by filing the pertinent particulars in Form – IRDAI – UNF- PASP (as prescribed in Annexure – 3 of Guidelines on the Standard Personal Accident Insurance Product), together with a certificate from the Chief Compliance Officer,stating that the said product filed is in compliance with the terms and norms prescribed under these guidelines;
- On review of the filed application, the IRDAI may call for such further details or information as may be needed and may issue appropriate directions, which shall be applied retrospectively in regard to all the contracts issued under this product;
- All the General and Health Insurers will offer this insurance product from 01.04.2021 onwards;
- Also, the guidelines on the standard personal accident insurance product have the approval of IRDAI as well.
In a nutshell, the Indian Insurance Sector has a wide range of personal accident insurance products, each of them with its unique features and benefits, which makes it a challenging task for the insuring public to select a suitable product matching their needs.
Hence, with the purpose of having a standard product with common policy wordings and coverage across the industry, the IRDAI has decided to obligate all the general and health insurers to provide the standard personal accident insurance product.Final-guidelines-on-standard-PA-product-25.02.2021