Complex insurance policy terms to be simplified soon

Vijay C Roy

Chandigarh, March 26

Par and non-par plans, single premium annuity plan, regular premium annuity plan or claimant. You must have encountered these insurance jargons or complex terms while buying a policy. You are not alone. The complexity has led to confusion among policyholders during the insurance purchasing process.

But soon it will be a thing of the past as insurance regulator would replace these complex terms with simple terms which can be easily understood by prospective and existing policy holders. “A committee has already been constituted by the Insurance Regulatory and Development Authority (IRDA) which is working on demystifying jargons and complex terms by replacing them with much simple and easy-to-understand terms,” said Anup Bagchi, MD & CEO of ICICI Prudential Life Insurance in an interaction with The Tribune.

According to insiders, the decision comes in the backdrop of the IRDA’s observation that policyholders often find it difficult to understand the terms and conditions in insurance policy contracts due to the complex language.

As a step towards IRDA’s goal of Insurance for all by 2047, the regulator is putting efforts towards creating a congenial ecosystem, which will foster a healthy environment leading to wider choice, accessibility and affordability to the policyholders.

Insiders informed that the committee would review the language used in existing insurance policy contracts and recommend changes to make it “simple and plain” while ensuring it remains legally correct and enforceable. Also, one of the committee’s objectives is to suggest policy wordings that clearly outline the obligations and responsibilities of each party involved in the insurance contract. Thirdly, the committee will also propose specifications, including typefaces for written materials and their presentation, for both print and electronic records. These specifications should enhance readability and comprehensibility for policyholders.

According to Bagchi, the initiative will empower policyholders to make more informed decisions and thus would increase the insurance penetration in the country. According to data, the overall life insurance penetration in the country is less than 5 per cent.

Keeping it plain & simple

• A committee constituted by the Insurance Regulatory and Development Authority is for making the language used in insurance policy contracts “plain and simple”
• It also wants the wordings that clearly outline the obligations
• and responsibilities of each party involved in the insurance contract