Tag Archives: renewal

covid standard health policy

IRDAI has vide its circular dated 13th October, 2020 allowed insurers to offer renewal, migration & portability as may be applicable to the covid standard health policies subject to certain conditions to be fulfilled. Gist of the circular is given below.

1.         Reference is drawn to clause 12 of Section C of Guidelines on Covid Standard Health Policy (Corona Kavach) (Ref: IRDAI/ HLT/ REG/ CIR/ 163/ 06/2020 dated 26th June, 2020) and clause 10 of Section C of Guidelines on Covid Standard benefit based Health Policy (Corona Rakshak) (Ref: IRDAI/ HLT/REG/CIR/164/06/2020 dated 26th June, 2020) vide which it was specified that lifelong renewability, migration and portability are not applicable to these products.

2.         Reference is also drawn to circular (Ref No: IRDAI/ HLT/ REG/ CIR/ 192/07/2020 dated 21.07.2020) on filing of Corona Kavach Policy as group health insurance product vide which insurers were allowed to offer Corona kavach policy as group product.

3.         In partial modification of the above guidelines, insurers have the choice to allow renewal, migration and portability, as may be applicable, for these COVID specific standard health products (i.e, “Corona Rakshak Policy”, “Corona Kavach Policy” and “Group Corona Kavach policy”) subject to the following norms.

4.         Renewal:

a)         ‘Corona Kavach’ and ‘Corona Rakshak’ policies of any tenure may be renewed for further terms of three and half months (3 ½ months), six and half months (6 ½ months) or nine and half months (9 ½ months) as per the option exercised by the policyholder. The renewal shall be subject to the underwriting policy of the insurer.

b)         Renewals, if any, may be done before the expiry of the existing policy contract.

c)         Where policy is renewed, additional waiting period of 15 days shall not be imposed and the coverage shall be continued seamlessly.

d)         During renewal, sum insured may be allowed to be changed by the policyholder. For any increase in the sum insured, the waiting period shall start afresh only for the enhanced portion of the sum insured.

e)         Corona Kavach and Corona Rakshak policies are permitted to be renewed till 31st March,2021 complying with clause 5 of Guidelines on introduction of short term health insurance policies providing coverage for COVID-19 disease (Circular Ref No: IRDAI/HLT/REG/ CIR/156/06/ 2020 dated 23.06.2020).

5.         Migration:

a)         In respect of Corona Kavach individual policies, insurers have the choice to offer migration to any other indemnity based health insurance product offered by them as per the option exercised by the policyholder.

b)         In respect of Corona Kavach Group policies, insurers have the choice to provide migration to the members insured to any other individual indemnity based health policy at the point of exit of the member insured from the group policy or the cessation of coverage of the underlying group policy.

c)         Where migration is allowed, the accrued gains of waiting period served in the existing Corona Kavach policy (Individual/Group) shall be protected in respect of coverage for Covid-19, in the migrated policy.

6.         Portability: General and Health Insurers are permitted to allow portability of Corona Kavach (individual) policy from one insurer to another. The accrued gains of waiting period served in the existing Corona Kavach policy shall be protected in respect of coverage of Covid-19, by the porting-in insurer.

7.         Where migration/portability from the Corona Kavach policy (Group/Individual, as applicable) is allowed by the insurers, such migration/portability to any other comprehensive health insurance policy shall be allowed, till the end of policy period of the existing Corona Kavach policy.

8.         This has approval of the Competent Authority.

Leave a comment

Filed under insurance

Credit facilities

RBI circular dated 21st August, 2020 on the ad-hoc/ short review/ renewal of credit facilities by banks

In terms of circular DBOD.No.BP.(SC).BC.98/21.04.103/99 dated October 7, 1999 on Risk Management System in Banks, Scheduled Commercial Banks (SCBs) are required to put in place a board approved credit policy, which, inter alia, should prescribe the periodicity and methodology of review/renewal of credit facilities. The policy should also prescribe differential time schedules for review/renewal of borrower limits so that lower rated borrowers whose financials show signs of problems are subjected to renewal control more frequently. The Master Circular for Urban Cooperative Banks (UCBs) on Management of Advances – UCBs dated July 1, 2015, requires all UCBs to lay down policy guidelines for periodic review of the working capital limits.

2. Further, in terms of the Master Circular DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances and the Master Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 1, 2015 on Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs as applicable to SCBs and UCBs respectively, an account where the regular/ad-hoc credit limits have not been reviewed/renewed within the prescribed timeline from the due date/date of ad-hoc sanction will be treated as Non-Performing Asset.

3. Banks are, therefore, expected to have a detailed Board approved policy on methodology and periodicity for review/renewal of credit facilities within the overall regulatory guidelines, and adhere to the same strictly.

4. However, an analysis of practices followed by the lenders while reviewing/renewing credit facilities has brought out certain supervisory concerns, including that of frequent/repeated ad-hoc review/renewal of credit facilities instead of regular review/renewals, non-capturing and/or inaccurate capturing of review/renewal data in the banking/information systems, and non-coverage of review/renewal activities under the concurrent audit/internal audit mechanism.

5. In this connection, we reiterate that timely and comprehensive review/renewal of credit facilities should be an integral part of the Board approved loan policy and credit risk management framework, and banks should avoid frequent and repeated ad-hoc/short review/renewal of credit facilities without justifiable reasons. Banks are also advised to capture all the data relating to regular as well as ad-hoc/short review/renewal of credit facilities in their core banking systems/management information systems and make the same available for scrutiny as and when required by any audit or inspection by Auditors/RBI. Further, the processes governing review/renewal of credit facilities should be brought under the scope of concurrent/internal audit/internal control mechanism of banks with immediate effect.

6. We advise that all banks should follow above instructions in letter and spirit.

Leave a comment

Filed under banking laws