Irdai Forms Committee to Simplify Insurance Policy Language

October 27, 2023

The Insurance Regulatory and Development Authority of India (Irdai) has taken a significant step toward improving the clarity of insurance policies. Irdai announced the formation of an eight-member committee tasked with simplifying the language used in insurance policies. The move aims to empower policyholders to make more informed decisions when purchasing insurance coverage. The committee has been given a timeframe of 8-10 weeks to submit its recommendations.

Addressing Complexity

Irdai’s decision to establish the committee stems from a recognition that policyholders often struggle to comprehend the terms and conditions outlined in insurance policy contracts due to the complexity of the language used. This complexity has led to confusion among policyholders during the insurance purchasing process.

Irdai’s Commitment

In its circular, Irdai emphasized its commitment to the vision of “insurance for all by 2047.” To achieve this objective, the regulatory body is actively working to create a progressive, supportive, and forward-looking regulatory framework. This framework aims to foster an environment that offers policyholders a wider range of choices, improved accessibility, and affordability when it comes to insurance.

The Committee’s Mandate

The newly formed committee has a clear mandate. It is tasked with:

Examining Existing Policy Wording: The committee will review the language used in existing insurance policy contracts and recommend changes to make it “simple and plain” while ensuring it remains legally correct and enforceable.
Specifying Obligations and Responsibilities: One of the committee’s objectives is to suggest policy wordings that clearly outline the obligations and responsibilities of each party involved in the insurance contract.
Readable and Comprehensible Specifications: The committee will also propose specifications, including typefaces for written materials and their presentation, for both print and electronic records. These specifications should enhance readability and comprehensibility for policyholders.

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