General Insurance Council notifies draft policy wordings

12 November 2007

Chennai: In order to remove misgivings in the minds of policyholders and to bring some uniformity in the definitions in a free pricing regime, the General Insurance Council of India (GICI) has notified a draft stipulating standard market wordings and uniform phraseology to be used by all non-life insurers.

All the non-life insurers have to use the standard market wordings for fire, engineering and motor insurance policies and endorsements.

"The standardisation of the policy wordings would facilitate smooth transition from administered pricing market to a free pricing market," says K N Bhandari, secretary general, GICI.

According to him, the draft policy wordings have been arrived after detailed consultations with all the non-life insurers. The document does not prescribe the conditions of an insurance policy but prescribes how the conditions are to be worded.

"In a free pricing regime there will be room for mis-selling. This is one attempt to prevent mis-selling. The underwriter''s forum of the domestic non-life insurers were involved in this project," Bhandari says.

Further in a free pricing market, standardisation of terminologies would enable a policyholder to compare similar products from different insurers to arrive at an informed decision.