No add-on covers by general insurers: IRDAI
The clause was introduced for the sake of convenience, say insurers. This move comes close on the heels of GIC’s decision to hike insurance rates in 42 sectors.
Automatic extensions allow policyholders to enjoy the benefits of the base policy cover for a specified period, with the insurer charging them on a pro-rata basis and with the terms and conditions for add-on the same as the base cover.
The clause was introduced for the sake of convenience, say insurers. “If a corporate has one or more policies with an insurer, and if each policy is ending on a different date, the policies could be bundled together with add-ons so that they would all need to be renewed at the same date (providing convenience for both insurer and insured),” said Puneet Shani, head (product development), SBI General Insurance.
These extension add-ons have been used more by public sector companies, which issue tenders before taking up insurance.
“For most private companies, they also have audits and yearly book keeping. So, they would prefer the policy closing annually and getting renewed year-on-year. So it’s mostly PSUs who have been using add-ons,” said an executive with a private insurer.