COVID-19 Relief Measures by IRDAI for Insurance Companies

COVID-19 Relief Measures by IRDAI for Insurance Companies

Due to the outbreak of COVID‐19 pandemic and the nation‐wide lock‐down, most of the government offices are closed and a few involved in emergency & essential services, are functioning with skeletal staff. This results in some disruption in the operations of insurance companies too and other entities connected with insurance industries. IRDAI has announced various relaxations and extension of compliance dates for regulatory returns in the interest of smooth operation of affairs of insurance industry. And for the policyholders by extending the renewal due date for the insurance policies expiring during COVID-19 disruptions and ensuring risk coverage.

Special measures announced by IRDAI for Insurance Companies

Source: IRDAI Circular: IRDA/F&A/CIR/2019-20/481 dt. 23/03/2020

Relaxation in conducting Physical Board Meetings under Companies Act, 2013
  1. Whether the Board meeting of the insurance companies can also be conducted through Video Conferencing or any other audiovisual means due to an outbreak of COVID-19 rather than physical board meeting?

Yes, The Ministry of corporate affairs has relaxed the requirement of holding Board meetings with the physical presence of directors and allowed to hold through video conferencing or other audiovisual means by duly ensuring compliance of Rule 3 of Companies (Meetings of Board and its Powers) Rules, 2014 vide its notification dt.19.03.2020. (Originally restriction imposed to conduct as Audio-Visual meeting as per Rule 4 of the said rules)

 

  1. What kind of board meetings can be conducted through Video Conferencing or any other audiovisual means?

Relaxation is given for below Board Meetings as a precautionary step to overcome the outbreak of the Covid-19 which was restricted as not to be dealt with in a meeting through Video Conferencing or any other audiovisual means;

– The approval of the annual financial statements;

– The approval of the Board’s report;

– The approval of the prospectus;

– The Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under subsection (1) of section 134 of the Act; and

– The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

  1. Until when this relaxation of conducting board meeting through Video conferencing & any other audiovisual means is applicable?

This relaxation is applicable for the Board meetings to be conducted from 19.03.2020 till 30.06.2020

Source:  IRDA/Life/Cir/Misc./072/03/2020 dt. 23/03/2020

IRDAI/Life/Cir/Misc./078/04/2020 dt.04/04/2020

 

Various Relaxation provided to Insurance Companies
  1. Is there any extension granted for payment of premium due for the month of March’2020 & April’2020 for life insurance policies during COVID-19 disruptions?

Yes, IRDAI has instructed the insurance companies to grant an additional 30 days grace period for payment for premium for renewal of Life Insurance policies if requested by the policyholders.

 

  1. Is there any extension granted for payment of premium due on Health insurance policies during COVID-19 disruptions?

No, IRDAI has clarified through its press release on 23.03.2020 the insurance companies may condone delay in renewal up to 30 days without deeming such condonation as a break in policy.

 

  1. Whether any change in the due date for submission of monthly returns for the month of March’2020 for Insurance Companies & Intermediaries during COVID-19 disruptions?

Yes, IRDAI has informed through its press release on 23.03.2020 the insurance companies & Insurance intermediaries can submit the monthly return to the authority for the month of March’2020 with an additional time of 15 days from the exiting due date.

 

  1. Whether any change in the due date for submission of quarterly returns for the quarter ending March’2020 for Insurance Companies & Intermediaries during COVID-19 disruptions?

Yes, the insurance companies & Insurance intermediaries can submit the quarterly return to the authority with an additional time of 1 month from the exiting due date.

 

  1. Any specific periodic reports to be submitted by Insurers to the authority during this COVID-19 outbreak lockdown period?

 

Yes, a report on details of offices & data of claims related to COVID-19 need to maintained and submitted on demand as below;

-A Fortnight report on details of offices fully or partially closed during lockdown with duration & prevention steps taken for COVID-19 to be submitted to authority

-Data related to claims pertains to COVID-19 shall be maintained separately for submission as and when called for by the authority.

  1. Whether any special actions to be taken during COVID-19 by the insurance companies dealing Life Insurance?

The insurance companies dealing with life insurance coverage shall update in their companies website with the below mandatory details;

-List of offices not functioning fully or partially

-Alternate arrangement for servicing policyholders

-Emergency Contact phone numbers

-Admissibility or otherwise of COVID-19 deaths claims for all life insurance products & health insurance contracts

-Specific product-wise information related to health insurance contracts

-Information on the alternate channel for payment of premiums

-Information on requirements for submission of claim

-Timely settlement of claims

-Any other service requests

Source: IRDAI Press Release dt. 27/03/2020

 

Extension of Validity of premium rates – Motor Third-party Insurance
  1. Will there be any extension provided for the validity of premium rates for Motor Third Party Liability Insurance Cover set out for the year 2019-20 as it is expired on 31.03.2020, owing to COVID-19 lockdown?

Yes, IRDAI through its order instructed all insurers can continue to charge the rates currently being charged for Motor Third Party Liability Insurance Cover from 01.04.2020 onwards until further orders, since the validity of premium rates for Motor Third Party Liability Insurance Cover set out for the year 2019-20 stands extended beyond 31.03.2020.

Source: IRDAI Press Release dt. 28/03/2020 

Extension of the compliance date for submitting board approved final Reinsurance programme for FY 20-21
  1. Is there any extension available to submit board approved Final Re-Insurance programme in view of COVID-19 pandemic for the FY 20-21 under IRDAI (Re-Insurance) Regulations, 2018?

Yes, Insurers can file the board approved final reinsurance programme along with synopsis of catastrophic modelling report on or before 31.05.2020 (instead of 30.04.2020) as per the relaxation permitted by IRDAI due to COVID-19 outbreak.

Source: IRDAI/ INSP/ CIR/ MISC/ 077 /03/2020 dt.30/03/2020

IRDAI/Life/Cir/Misc./079/04/2020 dt. 04/04/2020

IRDAI/INT/Cir/Misc./ 087/04/2020 dt.09/04/2020

Relaxation in regulatory return filing & precautionary steps during COVID-19
  1. Is there any extension given for filing regulatory returns as at 31.03.2020 by all insurers?

Yes, an additional time allowed for filing Regulatory Returns as at 31.03.2020 as below;

– Monthly Returns: 15 days

– Quarterly, Half-Yearly and Yearly Returns: 30 days

– Cyber Security Audit: 30 days

The revised timeline as above is granted in addition to the time normally available for filing the regulatory returns.

  1. What are all the necessary precaution steps to be taken by insurance companies as it is exempted from lockdown as it is critical requirement?

Insurance, being a critical requirement of the population, has been exempted from the lock down, IRDAI issued the following precautionary steps while operating during lockdown by all insurance companies.

– Operate their offices with absolutely necessary staff so as to maintain essential insurance services including claims settlement, authorisation for hospitalisation, renewal of insurance policies and such other activities.

-In all the operating offices, extreme care needs to be taken by all concerned to maintain prescribed hygiene, social distancing etc.

-To the extent possible, work from home may be adopted by facilitating the same for the staff of insurers, intermediaries and agents.

-Shall prominently display on their website a dedicated help line number for policyholders and another help line number for other stakeholders including agents and intermediaries.

-Shall also display the contact number of the officer who can be approached, if the concerns of any of the policyholders and other stakeholders are not resolved through the dedicated help line numbers.

-Shall display FAQs for COVID-19 claims on their websites.

-Shall submit the copy of the Business Continuity Plan (BCP) which inter alia deals with processes, transactions, reporting and customer services to be handled in a seamless manner to take care of the present situation to the Authority.

-Shall set up a Crisis Management Committee, comprising of key personnel to monitor the current situation on real time basis and to take appropriate timely decisions.

-Any severe impact on the operations or capital requirements or solvency margin shall be promptly communicated to the Authority.

-To take precautionary measures to address cyber risks , data security and to mitigate such risks as soon as they are identified.

-Shall make special efforts to enable the policyholders to pay premium using digital methods by educating them through SMS, emails etc.

 

  1. Whether any relaxation provided to insurers to dispatch the policy documents due to non-availability of courier services during lockdown?

As a special case, an additional period of 30 days is allowed for insurers for dispatch of documents for policies issued between 15.03.2020 and 30.04.2020.

 

  1. Any other mode of delivery of policy documents to the insurers amidst lockdown to the policyholders?

Wherever email addresses of policyholders are available, policy documents can be issued through email within the prescribed period. And SMS also can be send to confirm to the policyholders about issue of policy documents.

 

  1. Whether any relaxation provided for addressing policy holder’s complaint due to skeletal staff and non-availability of manpower due to COVID-19 lockdown?

Yes, due to the prevailing lockdown situation, an additional 21 days is allowed in respect of all complaints which are received on or after 15.03.2020 and upto 30.04.2020. (the normal response time for policyholder complaint redressal is 15 days).

  1. What is the validity of the already issued Travel insurance between 22.03.2020 to 30.04.2020, since the insurer might not travelled due to Lockdown?

If the insurance companies already issued travel insurance policies which were/are valid between 22.03.2020 and 30.04.2020, an option may be provided to the policyholders to defer the date of travel without any additional charge.

Source: IRDA/F&I/CIR/INV/085/04/2020 dt.08/04/2020

Moratorium on Term Loans:
  1. Whether insurers also permitted to extend the Moratorium to their customers?

Yes, the insurers are also permitted to grant a moratorium of 3 months towards payment of instalments of Term loan falling due between 01.03.2020 and 31.05.2020.

 

  1. Will there be a change in the repayment structure of the term loan if the borrowers opt for Moratorium?

The repayment schedule for term loans and also the residual tenor, will be shifted across the board by 3 months subsequent to the moratorium period.

 

  1. Will the rescheduling of payments, including interest, qualify as a default for the purpose of reporting of NPAs?

No, the rescheduling of payments, including interest, will not qualify as a default for the purpose of reporting of NPAs.

 

  1. Will this non-payment of installments attracts interest during the Moratorium period?

Yes, interest shall continue to accrue on the outstanding portion of instalment during Moratorium period until it is paid.

  1. Will this non-payment of installments attracts penalty or bouncing charges during Moratorium period, considered as default?

No, it will not attract a penalty or bouncing charges on the deferred EMI’s and not considered as default

 

  1. Will this non-payment of installment by the borrowers will result in asset classification downgrade?

No, this moratorium on term loans will not result in asset classification downgrade (i.e) (shall be determined on the basis of revised due dates and revised repayment schedule), for the borrowers

 

  1. What are the necessary measures to be taken by insurers for Moratorium?

Insurers shall frame Board approved policies to extend mentioned reliefs to all eligible borrowers.

 

  1. Whether any other compliance to be met by insurers apart from board approved policies with regard to Moratorium?

Yes, Confirmation from Concurrent Auditors in their reports for the quarter ending June, 2020 that the insurers have complied with the Board Approved policy in granting moratorium.

Source: IRDAI/HLT/CIR/MISC/093/04/2020 dt.16/04/2020 

Mandatory medical insurance coverage to workers as part of the National Directives of MHA, GOI
  1. Whether it is mandatory for the insurance companies to devise a medical insurance product for workers as part of the National Directives of MHA, GOI?

Yes, the General and Stand along Health Insurers (Except AIC and ECGC) are advised by IRDAI to devise comprehensive Health insurance products with simple wordings, conditions and at affordable cost to be offered to the stated organisations either to individuals or groups in order to enable the listed organisations / employers / establishments to comply with the National directives as per Order No. 40-3/2020-DM-I (A) dated 15.04.2020 by Ministry of Home Affairs.

Source: IRDAI/HLT/REG/CIR/054/03/2020 dt.04/03/2020

           IRDAI/HLT/MISC/CIR/95/04/2020 dt.18/04/2020

Revised norms on the settlement of health insurance COVID-19 claims:
  1. Is there any specific timelines directed by IRDAI for expeditious claim process pertaining to COVID 19?

Yes, to ensure all health insurance claims are responded to quickly, insurers are directed to comply with the following timelines by IRDAI

-Decision on authorization for cashless treatment shall be communicated to the network provider (hospital) within 2 hours from the time of receipt of authorization request and last necessary requirement from the hospital either to the insurer or to the TPA whichever is earlier.

-Decision on final discharge shall be communicated to the network provider within 2 hours from the time of receipt of the final bill and last necessary requirement from the hospital either to the insurer or to the TPA whichever is earlier.

Source: IRDAI/HLT/REG/CIR/096/04/2020 dt.20/04/2020 

Norms on collection of Health Insurance Premium during COVID-19 crisis:
  1. Whether any relaxation provided for collecting premium payments from policyholders, in view of prevailing conditions owing to COVID-19 outbreak?

Yes, for easing the payment of health insurance premiums, all the insurers are allowed to collect health insurance premiums in instalments, as they may deem appropriate for any specific product(s) subject to the following condition;

-There shall be no change in the basic premium table and charging structure under the approved individual product to which new premium payment mode (frequency) is being added.

-The premium mode (frequency) proposed to be added may be monthly, quarterly or half yearly and the resulting premium amounts under each mode (frequency) are consistent with premium amounts under other premium modes (frequencies) of the underlying product.

-The basis for arriving at the factors, if any, to be applied on the premium payment modes / frequencies proposed to be added or removed is disclosed in the prescribed Form (FORM-IRDAI-FNU-HIP)

  1. Is the payment of premium as installment option is a temporary relief to the health insurance policy holders?

No, the premium instalment facility can be offered either as a permanent feature by duly complying with the norms specified or can be offered as a temporary relief for a period of 12 months (one policy year) in respect of all the health insurance policies that are due for renewal up to 31st March, 2021

 

  1. Any steps to be taken by insurance companies on the relaxation of the premium payment option?

Yes, every insurance companies shall follow the below additional measures with respect to premium payment option

-The matter of availability of facility of payment of premiums in instalments and the conditions thereon shall be suitably published in the website.

-Specific consent of having agreed to the conditions shall be obtained from the policyholders.

-The names of the products that are offered the facility of payment of premiums in instalments shall be published in the websites for the information of policyholders.

-The details of products in respect of which the Instalments facility is made available shall be filed with the Authority as per Annexure – 1 within 7 days from the date of offering the facility (as per IRDAI (Health Insurance) Regulations, 2016)

Source: IRDA/F&A/CIR/MISC/102/04/2020 dt.30/04/2020

Relaxation provided for review and updation of Stewardship policy
  1. Whether any relaxation provided for review and update of stewardship policy based on the Revised Guidelines on Stewardship Code for insurers in India?

Yes, the timeline for review and update of stewardship policy based on the Revised Guidelines on Stewardship Code for insurers is extended up to 31.05.2020 due to COVID-19 lockdown (Instead of within three months from the date of issue of the circular 07.02.2020, i.e., by 07.05.2020)

 

Special measures announced for Policy Holders due to COVID -19 disruptions
Source: IRDAI Press Release dt.30/04/2020
Relaxation on General condition in Standard Fire and Special Peril Policy: 
  1. Is there any relaxation provided in the general condition in Standard Fire and Special Peril Policy when the policyholders (Insureds) premises are unoccupied more than 30 days for the continuity of the policy?

Yes, one-time relaxation extended to the Standard Fire and Special Peril Policy holders whose properties are unoccupied during the national lock-down period between 25.03.2020 and 03.05. 2020 **, since this will not be considered as violation of general conditions (i.e unoccupied for more than 30 days) and the policy will remain valid during the COVID-19 lockdown.

 

  1. Whether the Policy holders need to approach the insurance companies for the details of the relaxation provided?

No, the respective insurance companies will communicate directly to the policyholders through email, SMS or other digital means advising well in time on the action to be taken by the policyholders for ensuring uninterrupted coverage of the policies as it will be different from each insurers.

  1. What are the steps to be taken by policy holders if their insured properties are located in areas where there could be prolonged restriction of movement?

The Policyholders are advised to read the terms and conditions of their insurance policies carefully and be aware of the policy requirements in case they or their insured properties are located in areas where there could be prolonged restriction of movement or they can directly contact the insurers or take the assistance of Agents or Intermediaries through whom they have availed the Insurance Policies.

**Awaiting the possible extension of one-time relaxation is policyholders whose property is unoccupied on or after 25.03.2020 till 17.05.2020 (instead of 03.05.2020) due to recent Lockdown 3 announcement.

                        Source: Notification S.O. 1237 (E) & S.O. 1238 (E) dt.01/04/2020

                                      IRDAI/HLT/ CIR/MISC/091 /04/2020 dt.16/04/2020

                                      IRDAI/NL/CIR/MOT/ 090 /04/2020 dt.16/04/2020

                                      Notification G.S.R. 229 (E) dt.01/04/2020

                                      Notification S.O. 1258 (E) & S.O. 1259 (E) dt.15/04/2020 

Relaxation on Premium payments for Policy Holders:
  1. What if when the Motor vehicle third party insurance policies is expiring from 25.03.2020 to 03.05.2020** not renewed within the due date of renewal of insurance due to COVID-19 lockdown?

The policyholders whose motor vehicle third party insurance policies falling due for renewal during the period on and from the 25.03.2020 to 03.05.2020** and unable to make renewal premium amount on time in view of COVID-19 disruptions, are allowed to make for renewal of policies payment to their insurers on or before the 15.05.2020** to ensure continuity of the statutory motor vehicle third party insurance cover from the date on which the policy falls due for renewal.

  1. What if when the Health insurance policy is expiring 25.03.2020 to 03.05.2020**, not renewed within the due date of renewal of insurance due to COVID-19 lockdown?

The policyholders whose health insurance policies falling due for renewal during the period on and from the 25.03.2020 to 03.05.2020** and unable to make renewal premium amount on time in view of COVID-19 disruptions are allowed to make payment for renewal of policies to their insurers on or before the 15.05.2020** to ensure continuity of the health insurance cover from the date on which the policy falls due for renewal.

  1. Whether Risk coverage will be extended during this period for which renewal was not paid on time by the Health & Motor Vehicle Third party insurance policyholders by the insurance companies?

Yes, the risk coverage shall be extended subject to the condition that the premium shall be paid within the date as the Central Government may, by notification, specify in this behalf (i.e) the renewal premium to be paid to the insurer on or before 15.05.2020** (vide Rule 59(o) & Rule 59(p) of Insurance Rules, 1939).

 

Thenmozhi Krishnakumar

Manager – Finance

Aparajitha Corporate Services Private Limited

 

Disclaimer: “The article represents the opinions of the author and the author is solely responsible for the facts, cases and legal or otherwise reproduced in the article”

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