Irdai introduces guidelines on standard domestic travel insurance policy

The Insurance Regulatory and Development Authority of India (Irdai) has issued guidelines on Bharat Yatra Suraksha, the standard domestic travel insurance product, that will provide coverage for hospitalization expenses, death, permanent complete or partial disablement due to an accident, for travel through taxi, bus, train, ship, and airplane in the country.

The base cover will provide coverage for hospitalization expenses ranging from Rs1 lakh to Rs10 lakh and an accidental death benefit ranging from Rs1 lakh to Rs1 crore. Optional covers include coverage for missed flight connections, loss of checked-in baggage, trip delays beyond three hours, and cancellations.

As the proposed product will be issued as per journey and trip, policyholders won’t be able to renew the policy, however, extension on payment of premium has been permitted. There will only be a single premium payment, which needs to be paid in advance.

“In the market today, there is a plethora of products that have different coverage, add-ons, and are mostly structured differently. Standardization of the travel insurance product will provide the policyholder with certainty in terms of how the insurance policy is administered, interpreted, how will the claims be paid, etc. And when it comes to making a choice among the already available products, a buyer can decide based on the brand, the price, and the servicing experience,” said Sanjay Datta, chief-underwriting, claims and reinsurance, ICICI Lombard General Insurance.

While the standard travel policy is not mandatory, the insurance regulator has urged general and health insurers to offer this product from 1 July 2021.

“Though a number of travel insurance products are available in India, each product is distinct, and the insuring public may find it difficult to choose an appropriate product. Therefore, a standard travel product is designed with uniform features of coverage, to meet the most common requirements of a common passenger,” Irdai said in a circular dated 5 May 2021.

There will be no co-payment under the standard domestic travel products, but insurers have been allowed to put deductibles.

Co-payment is a cost-sharing requirement where the policyholder will bear a certain percentage of the amount of the admissible claims, while deductibles are the amount that an insured must pay from their own pocket before the insurer pays for the policy coverage.

The policy has restricted room rent, boarding and nursing expenses at up to 2% of the sum insured subject to a maximum of Rs10,000 per day and intensive care unit (ICU) charges have been capped at 4% of the sum insured or a maximum of Rs20,000 per day.

The product will come in five variants depending on the distance of the journey as well as the mode of transportation. Under Plan A, the coverage will be for travel through a taxi or bus within 100 km from the place of origin. While Plan B will offer coverage for travel via taxi or bus distance of more than 100 km, Plan C and D cover air and train travel with no restriction on the journey distance. Plan E covers all the above-mentioned modes of transportation plus it provides coverage for the round trip. Moreover, only Plan E provides cover for up to 30 days period, while other plans are valid for a single journey only.

There shall be no restriction on minimum and maximum age in the policy. According to Irdai, the product can be offered on an individual as well as a group basis, but when it comes to the family cover, the sum insured will apply to each family member separately.

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