Saturday 10 May 2014

LIC - THE KINGPIN


Now, Life Insurers can file only 5 products a year



Now, life insurers can file only 5 products a year
17-Apr-2014
Source : Business Standard
M Saraswathy,
The Insurance Regulatory Development Authority (Irda) has come out with a
new product planner rule by which an insurance company can file only five
products for approval a year. But, this has not gone down well with the
companies. According to them, this norm would impact the availability of
innovative products to consumers.
“We have already filed products under the new traditional product regime.
Since the basic products have been in place, this was the time to file newer
riders and innovative products from FY15. However, the product planner
rules do not encourage this,” said the chief actuary of a private life insurance
company.
In an attempt to reduce time taken for product approvals, Irda has asked life
insurers for a product planner before every financial year. The planner would
give an indication of the number of products an insurer proposes to file each
quarter.
Irda has said if the number of products exceeded five, the insurer should
furnish supporting market research, product-wise persistency for the 13th
month, 25th month and 37th month as on April 30 of the previous year.
At present, Irda follows the file-and-use method of application, wherein
insurers apply to obtain prior approval of the authority to introduce/modify
insurance products.
Beginning April 2014, insurers have been advised to file this planner, at least
45 days before the beginning of the next financial year, that is, before
February 15 of each year.
On an average, industry players file about 8-10 products and riders each
year, which are an addition to their existing product portfolio. With the cap
now at five, insurers are worried that the choice given to a customer might
be limited because insurers would not be able to file more than one product
in each category (pension, health, group, individual and others).
“It is still not clear whether riders will be a part of this five-per-year cap. This
can be restrictive, especially for players who were busy in getting their basic
products like pure term and endowment cleared first. For customers, while
there would be no immediate impact, going forward they would have fewer
products to choose from,” said a senior executive of a life insurance firm.
The senior vice-president of a bank-promoted insurance company said
though the decision might be useful in quicker product approvals in the long
run, implementing it this year would be an arduous task for insurers.
Insurance Details Report Page 1 of 2
Print
“The blockbuster products are already out of the market and are replaced
with newer versions. While customers are still in the process of fully
understanding the changes, any limit on the number of products to be filed
could affect our books,” the executive said.
Though insurers have expressed their concerns to Irda, sources said there
had been no decision to postpone the plan. Apart from postponing its
implementation, insurers have also requested the regulator to increase the
cap to 10-12 products a year.
Insurance Details Report Page 2 of 2


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Thanks to :
Mr.VINAY KUMAR MOHANTY  MA
CHAIRMAN INFORMATION TECHNOLOGY
(LIFE INSURANCE AGENTS FEDERATION OF INDIA)