IRDA to streamline servicing of ‘orphaned' life insurance policies

If your agent stopped servicing life insurance policy after making you buy it, there is nothing to worry.

Such policies, which are ‘orphaned' due to exit of an agent from the profession after selling a policy, should be well-serviced by the insurers by allotting them to other agents, the Insurance Regulatory and Development Authority said.

In its exposure draft on servicing of orphaned policies, the regulator said a large number of agents were discontinuing their services with a given insurance company before completing the minimum service prescribed.

At present, a minimum period of five years is must for an agent to get renewal commission.

Due to this, some policies are left ‘orphan' and the policyholder suffers from lack of proper assistance in the servicing of the policy.

The insurance company also suffers because of the drop of persistency which might occur in such cases.

“It is important and in the interest of such policy holders to provide for a system where they are not denied the benefit of having an agent to look after their policy service issues in the best interest of policyholders,'' IRDA said.

The life insurers shall notify the particulars of ‘allottee agent' to the concerned policy holders as well.

While allotting the policies for servicing, the life insurers should direct the allottee agents that all policy services shall be rendered similar to how an insurance agent would render to those policies that were otherwise effected by him / her.

The insurers should put in place procedures for capturing the details of the policy allotted agents who are servicing the allotted policies, in order to ensure that the objectives of allotment are met, the draft said.