The amended law updates three key statutes—the Insurance Act, LIC Act and IRDAI Act—and strengthens the role of Insurance Regulatory and Development Authority of India. Instead of spelling out new consumer rights in detail, the law focuses on giving the regulator sharper enforcement tools.
Key changes include:
Greater powers for IRDAI to issue binding directions
Higher penalties linked to policyholder harm
Authority to order disgorgement of wrongful gains
Regulation of commissions and incentives
Mandatory electronic records of policies and claims
These steps aim to improve transparency and discipline across the insurance industry.
That is where expectations need tempering. The law does not:
Fix statutory timelines for claim settlement
Mandate automatic penalties for delays
Directly alter how claims are processed
Experts describe the reform as “evolutionary, not transformative.” While IRDAI already sets claim timelines through regulations, the real issue has been inconsistent monitoring and enforcement, not the absence of rules.
Industry specialists agree the biggest shift is enforcement power, not new rights. If IRDAI actively uses its expanded authority—by penalising repeat offenders, publicly naming violations, and forcing corrective action—insurers may become more cautious about delaying or unfairly rejecting claims.
However, challenges remain:
Grievance redressal and ombudsman systems are still slow
Disputed health claims involving medical interpretation may continue to drag
Many consumers lack the time or resources to pursue complaints
In the short term:
Limited change in day-to-day claim experience
Over the next few years:
More insurers and competition
Better digital processes and record-keeping
Potentially fewer opaque rejections, if enforcement tightens
The new insurance law strengthens the referee rather than rewriting the rules of the game. Claim settlements will improve only if the regulator consistently and firmly enforces existing norms. For policyholders, the true impact will be felt not in the text of the law, but in how smoothly their next claim is processed.
