In order to curb mis-selling of travel insurance through online ticket booking portals and apps, IRDAI has directed insurers to ensure that the travel insurance coverage option is not pre-selected as a default option on any ticket booking portal at the time of buying tickets online and also that travel insurance cannot be bought along with tickets bought 90 days before date of travel. The curbs are effective immediately.
The Insurance Regulatory and Development Authority of India (IRDAI) circular dated 27.09.2019 states: “Insurers shall ensure that any portal or App providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. The circular shall come into force with immediate effect. All the group insurance arrangements that are not in compliance with these norms shall be terminated with effect from October 1, 2019.”
Here is how it will now become difficult for sellers to wrong/mis-sell travel insurance
Customers will not be allowed to buy travel insurance along with their travel ticket if they buy domestic travel tickets 90 days or more before the commencement of the journey.
According to the IRDAI circular, “Premium shall not be received more than 90 days in advance to the date of commencement of the risk covered in case of domestic travel or along with the ticket while purchasing the travel tickets, whichever is earlier.”
Gurdeep Singh Batra, Head – Retail Underwriting, Bajaj Allianz General Insurance said, “For domestic travel, the travel insurance will be issued within 90 days of the commencement of the covered risk, however, for international travel it can be issued anytime.”
He added, “Considering that the changes come in the backdrop of the travel insurance business for the industry gaining momentum, the move of providing those booking tickets with the confirmation option of whether they (the purchasers) want the cover or not is a welcome step. The consumer will not only be aware of what he is buying but also get to read the terms and conditions and agree to them. The norms will bring in greater transparency for the insured and insurer and also curb mis-selling.”
Currently, when you buy a ticket to travel, often travel insurance gets bundled with this by default without the purchaser realising it. Consequently, the purchaser ends up paying for the ticket and the insurance irrespective of whether he/she wanted the insurance or not.
If you check the detailed break-up of your bill, you will see (sometimes when it is visible and sometimes when it is not) the additional costs related to travel insurance premiums get added in your bill. For instance, while buying a flight ticket on Yatra or Makemytrip, the insurance policy buttons are pre-selected by default and you are charged for it too unless you specifically opt-out.
Therefore, to bring more transparency in buying travel insurance, the IRDAI circular directs as follows:
Where policies are offered under Group platform or through any travel agency or portal, the following norms shall comply:
- Insurers are responsible to ensure an informed choice to the persons to be insured and ensure compliance to Regulation 6 of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017.
- The name of the Insurance Company which is offering the travel insurance cover, the amount of the premium that shall be collected towards travel insurance cover shall be specifically disclosed as the cost of travel cover, at the time of opting to buy a travel insurance cover. Rate of tax that is applicable to the premium shall be also separately specified.
- Insurers shall ensure that any portal or App providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option. The prospect shall be able to specifically choose whether or not to buy the coverage.
- Where selected to buy, an option shall be provided for opting out or de-selecting the option before concluding the transaction.
- There shall be a provision to let the person to be insured buying a travel cover go through the benefits, terms and conditions offered under the travel insurance cover on the screen itself and consent shall be obtained in the form of selecting a radio button by the prospect /policyholder in confirmation of having read and understood the terms and conditions.
- In order to ensure that every travel policy offered is in compliance with these norms, there shall be a clause in the agreement entered with the master policyholder and in the terms and conditions of the group policy along with a provision to cancel the group policy arrangement if the master policyholder is not adhering to the norms specified.
According to the IRDAI circular, these norms are issued under the provisions of Section 34 (1) of the Insurance Act, 1938. Insurers shall put in place procedures to verify that at least once in a period of three months the travel policies offered are complying with the above norms.