Appreciating the decision of the General Insurance Council(GI Council), the official representative body of the general insurers,on providing a major relief to the India Inc in the matter of continuance of property covers – Standard Fire and Special Perils Policy(commonly known as property policy)- by the general insurers for the “unoccupied properties'' for more than one month -till May 3-, the insurance regulator, IRDAI further has asked the general insurers to provide proper guidance to the corporates on the matter.
“The general insurers have been advised by the IRDAI to inform the policyholders of how the relevant clause(s) would apply beyond 3rd May, 2020 in all policies and what action is needed by the policyholders to avail of uninterrupted coverage,’’ said IRDAI on Thursday..
The insurers need to take a reasonable and suitable approach depending on the local situation in different geographies, said IRDAI..
The insurers have also been advised by the IRDAI to continue to engage with their policyholders and give them the necessary guidance regarding the policy conditions in general that may get attracted during the lock-down or immediately thereafter.
“They should communicate directly with the policyholders through email, SMS or other digital means in clear and simple language advising them well in time on the action to be taken by the policyholders for ensuring uninterrupted coverage in all their insurance policies,’’ said IRDAI.
The policyholders in turn are requested 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. The policyholders may directly contact the insurers or take the assistance of agents or intermediaries through whom they have availed the Insurance Policies. The Insurers, Agents and Intermediaries who have placed business should work together to ensure that Policyholders are guided appropriately during these difficult times.
According to the GI Council, a Property Policy specifies that If the building insured or containing the insured property becomes unoccupied and so remains for a period of more than 30 days (Not applicable for Dwellings), the insurance ceases to attach as regards the property affected unless the Insured, before the occurrence of any loss or damage, obtains the sanction of the Company signified by endorsement upon the policy by or on behalf of the company.
“However, we are all going through an unprecedented situation of lockdown to battle the deadly Corona Virus.We do understand that in the current crisis it might not have been possible for some policyholders to send communication to insurance companies for continuation of coverage and obtain endorsements.Therefore it has been decided that a one-time relaxation is given to all policyholders whose property is unoccupied on or after Mar 25,2020 till May 3, 2020, Properties of such policyholders shall be deemed to be covered subject to the policy being in force. All other terms and conditions of the policy remain unaltered,’’ said GI council.
Policyholders are advised to contact their respective Insurance Company in case of any doubt / difficulty, said Council.
Meanwhile, Insurance Brokers Association of India(IBAI) had written a letter to IRDAI pointing out that as the current lockdown period cumulatively has been extended beyond 30 days, insurers should take cognizance of the current state of affairs and treat these as ‘Extraordinary and One off Situation’.
“We request the IRDAI to advise the insurers of the same in the interest of the policyholders. The current period of lockdown should not constitute either un-occupancy or cessation of work or any material change in the risk, which hampers the continuity of cover. Blanket advisory to not cover Business Interruption(BI) is not rational,'' said IRDAI.
Policyholders are afraid that the blanket advisory of GIC Re indicating that there is no BI cover in property policies and no advance loss of profit (ALOP) cover in project policies defies accepted principles of BI loss adjustment, said IBAI.