Accordingly, the IRDAI, in a recent circular, has asked the general insurers to state in the policy documents for commercial lines of business that “The parties to the contract may mutually agree and enter into a separate Arbitration Agreement to settle any and all disputes in relation to this policy.’’
Hyderabad:
Indian insurance regulator has disallowed any Arbitration Clause for all retail lines of business and said such clause will be only meant for commercial lines of business.
Accordingly, the IRDAI, in a recent circular, has asked the general insurers to state in the policy documents for commercial lines of business that “The parties to the contract may mutually agree and enter into a separate Arbitration Agreement to settle any and all disputes in relation to this policy.’’
For all the new policies issued on or after the date of this circular Arbitration Clause shall be deemed deleted from all the retail policies, the IRDAI said.
All arbitration cases for all commercial lines of business will be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996, said the IRDAI.
Earlier the Supreme Court of India had asked the IRDAI to undertake a comprehensive review of the extant Arbitration Clause prevalent across various lines of business in the Indian general insurance industry.
After due consultation with stakeholders, IRDAI is of the view that the extant Arbitration Clause is limited in scope and need to be amended.
“It was also viewed that the retail / individual policy holders may be kept out from the provisions of Arbitration Clause as they have alternative forums of Insurer’s Grievances System, Insurance Ombudsman and the Consumer Courts besides the Civil Courts available for redressal of their grievances/ disputes,’’ explained the IRDAI.
For all the existing policies, the existing Arbitration Clause will remain valid till the term of the policy unless a policyholder specifically requests the insurer to replace it with the new clause mandating all domestic general insurers to enforce Arbitration Clause only for commercial lines business.
The new clause will be deemed replaced the existing Arbitration Clause in all the commercial policies from the date of renewal falling on or after the date of this circular.
Insurers need to take necessary steps to bring it to the notice of the policyholders and to amend the relevant provisions of such policies, said the IRDAI.