Life insurers will not require previous IRDAI clearance to introduce specific products, and actuaries and product management committees will be given expanded responsibility.
Life insurance firms will now be able to introduce a broad variety of policies without seeking prior clearance from India’s Insurance Regulatory and Development Authority (IRDAI).
Following on from the ‘use-and-file’ policy for general insurance products, the insurance regulator has now expanded this framework to include framework to life insurance plans as well. From the standpoint of insurers, this shift will allow for faster product launches.
“It’s a positive start in the right way.” It has long been one of the life insurance industry’s demands. The change would increase the agility and flexibility of life insurers’ product design and launch processes significantly. “The previous product clearance procedure took a long time,” stated Vighnesh Shahane, MD and CEO of Ageas Federal Life Insurance.
The IRDAI feels that this would assist to increase insurance penetration in the nation. “This approach will allow life insurers to introduce the majority of products (excluding individual savings, individual pensions, and annuities) in a timely way in response to the market’s changing demands.” This would improve the convenience of doing business for insurers while also expanding the options accessible to policyholders, according to the circular.
Debashish Panda, who took over as IRDAI chairman in March, has stated his goal to reduce the insurance industry’s regulatory burden. The current move is one of a series of suggestions that have been under consideration since March. “The IRDAI’s positive action will help the life insurance market.” It will allow us to provide new solutions to our clients with more speed and agility, as well as assist promote life insurance penetration in the nation,” according to a Max Life Insurance statement.
Launch of a product without prior authorization
Individual and group pure term insurance, individual return-of-term insurance policies, unit-linked insurance policies with previously authorized fund choices, non-linked health policies, group non-linked superannuation, credit life, gratuity products, and so on will be available within the framework. Furthermore, businesses may introduce riders, or add-ons, such as accidental death benefit, accidental total/partial permanent disablement, and critical sickness riders to the market and afterwards register the goods with IRDAI.
“In the event that a new product/rider is introduced to replace an existing comparable product/rider, the premium rates and benefits of the new product/rider must be reasonable and fair…
“All alternatives must be simply explainable to potential policyholders,” according to the IRDAI circular.
Framework to life insurance responsibilities of insurers
Life insurance firms must implement a Board-approved product management and pricing policy (BAPMPP) and form a product management committee (PMC) that includes its Appointed Actuary, chief risk officer, and chief compliance officer, among others.
“The onus is now on the industry to be more circumspect and responsible when submitting goods.” Insurers must guarantee that procedures are followed. This might lead to more customized and personalized goods for policyholders,” said Shahane. The PMC will be in charge of assessing and approving new products, riders, and revisions to current products before they are submitted to the insurance regulator.
READ ALSO: Three Reasons Why You Must Consider Buying Term Insurance, Even If You Are Single
“The product approval procedure has been streamlined.” Insurers are liable for new products and must only notify the IRDAI once they are launched. It has established limits or guidelines for all products to ensure that policyholder interests are not jeopardized. “I believe this will result in the introduction of many new life products and variations,” said Kapil Mehta, Co-Founder of Secure Now Insurance Brokers.
The IRDAI requires insurers to guarantee that premium prices, levies, and other terms and conditions are practical, reasonable, and fair. However, since these policies would not have passed strict inspection, policyholders would be wise to read the terms and conditions more carefully when purchasing goods rather than leaving paperwork to intermediaries.
