 "Life insurers rush for product approvals")
With the deadline for new product bouquets just days away, life insurance companies are leaving no stone unturned in ensuring their products are out in the market on time.
In February this year, the Insurance Regulatory and Development Authority (Irda) had brought out traditional product guidelines that mandated life insurers to be compliant with the new norms by October 1. Their existing products are being re-filed with the regulator.
Rajesh Relan, managing director and country manager, PNB MetLife India, said after re-filing, there were multiple rounds of communications and clarifications between the company and the regulator. He added after securing an approval, companies would have to train their sales teams and start marketing-related activities.
Sanjay Tiwari, vice-president (products), HDFC Life, said the company was considering having a fairly balanced portfolio between traditional and unit-linked products. “We began re-filling long ago and, therefore, had a fairly clear view of what the product portfolio would be,” he said. In June, HDFC Life had launched a cover that was compliant with the new traditional product norms notified by the insurance regulator. The product — HDFC Life ClassicAssure Plus — was a protection-cum-investment plan, with a limited premium payment term.
The new traditional product guidelines stated the minimum guaranteed surrender value would be 30 per cent of the total premia paid, excluding any survival benefits paid, if the policy was surrendered in the second or third years. If it is surrendered in the fourth year, it would be 70 per cent of the total premia paid, excluding any survival benefits already paid. If it is surrendered in the fifth-seventh policy years, it would be 90 per cent of the premia paid, excluding the survival benefits paid. Beyond the seventh year, the surrender value would have to be filed by the insurer under ‘file & use’ terms for clearance.
Industry officials said companies would have liked more time to re-launch the entire portfolio, as training, back-end processes, marketing material development required time. However, Irda isn’t expected to extend the deadline. The regulator had, however, extended the deadline for group products from July 1 to August 1.
V Viswanand, director and head (product solutions management), Max Life Insurance, said the company had re-filed 20 products comprising individual, group and riders with the regulator and had received approvals for 10 so far. These account for 25-30 per cent of the sales plan. “Currently, we have 43 products/riders in our combined portfolio of group and individual products; not all would be replaced by October 1 due to the stringent deadline,” he said.
Irda has also changed the commission structure. The ceiling for first-year commissions has been kept at 15 per cent for a five-year term, 30 per cent for 10 years and 35 per cent for 12 years or more (40 per cent for insurers aged less than 10).
Earlier, Sudhin Roy Chowdhury, member (life), Irda, had told reporters the authority had geared up for the product re-filing process by engaging additional staff for product approvals.
Niraj Shah, senior vice-president and head (products), ICICI Prudential Life Insurance, said the company had started filing quite early and most of its products had been filed with Irda. “The process has been smooth and the regulator has given a reasonable amount of time for the products to be filed.”
For single premium products, Irda has fixed the minimum death benefit at 125 per cent of the single premium or the minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, whichever is higher. For other products, it would be 10 times the annualised premium or 105 per cent of all premia paid as of the date on death or the minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, whichever is higher.
Apart from re-filing, the sales and marketing activities are also underway in full swing. Anup Rau, chief executive, Reliance Life Insurance, said the company had re-filed most of the products and was well prepared to initiate the marketing activities for the re-launch of products in October.
On the group side, too, most products had been re-filed. Aneesh Khanna, head (e-business, marketing and product management), IDBI Federal Life, said two of the company’s group products had recently been approved. “We have started receiving approvals for some of our products; we hope to launch a reasonable number of products by October,” he said.
“We have taken this opportunity to streamline our product portfolio and weed out products that may not be relevant to address the customer of today, as insurance needs have evolved over time,” said Relan of PNB MetLife India. He added the company had re-filed most popular products and hoped to launch these at the earliest. It was considering launching all the popular variants accounting for 98 per cent of its portfolio, in premium terms, he said.
Traditional product guidelines, termed Irda’s most ambitious project, were on the drawing board of Irda’s Hyderabad office since early 2012, during the tenure of former Irda chairman J Hari Narayan.
In February this year, the Insurance Regulatory and Development Authority (Irda) had brought out traditional product guidelines that mandated life insurers to be compliant with the new norms by October 1. Their existing products are being re-filed with the regulator.
Rajesh Relan, managing director and country manager, PNB MetLife India, said after re-filing, there were multiple rounds of communications and clarifications between the company and the regulator. He added after securing an approval, companies would have to train their sales teams and start marketing-related activities.
Sanjay Tiwari, vice-president (products), HDFC Life, said the company was considering having a fairly balanced portfolio between traditional and unit-linked products. “We began re-filling long ago and, therefore, had a fairly clear view of what the product portfolio would be,” he said. In June, HDFC Life had launched a cover that was compliant with the new traditional product norms notified by the insurance regulator. The product — HDFC Life ClassicAssure Plus — was a protection-cum-investment plan, with a limited premium payment term.
The new traditional product guidelines stated the minimum guaranteed surrender value would be 30 per cent of the total premia paid, excluding any survival benefits paid, if the policy was surrendered in the second or third years. If it is surrendered in the fourth year, it would be 70 per cent of the total premia paid, excluding any survival benefits already paid. If it is surrendered in the fifth-seventh policy years, it would be 90 per cent of the premia paid, excluding the survival benefits paid. Beyond the seventh year, the surrender value would have to be filed by the insurer under ‘file & use’ terms for clearance.
Industry officials said companies would have liked more time to re-launch the entire portfolio, as training, back-end processes, marketing material development required time. However, Irda isn’t expected to extend the deadline. The regulator had, however, extended the deadline for group products from July 1 to August 1.
V Viswanand, director and head (product solutions management), Max Life Insurance, said the company had re-filed 20 products comprising individual, group and riders with the regulator and had received approvals for 10 so far. These account for 25-30 per cent of the sales plan. “Currently, we have 43 products/riders in our combined portfolio of group and individual products; not all would be replaced by October 1 due to the stringent deadline,” he said.
Irda has also changed the commission structure. The ceiling for first-year commissions has been kept at 15 per cent for a five-year term, 30 per cent for 10 years and 35 per cent for 12 years or more (40 per cent for insurers aged less than 10).
Earlier, Sudhin Roy Chowdhury, member (life), Irda, had told reporters the authority had geared up for the product re-filing process by engaging additional staff for product approvals.
Niraj Shah, senior vice-president and head (products), ICICI Prudential Life Insurance, said the company had started filing quite early and most of its products had been filed with Irda. “The process has been smooth and the regulator has given a reasonable amount of time for the products to be filed.”
For single premium products, Irda has fixed the minimum death benefit at 125 per cent of the single premium or the minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, whichever is higher. For other products, it would be 10 times the annualised premium or 105 per cent of all premia paid as of the date on death or the minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, whichever is higher.
Apart from re-filing, the sales and marketing activities are also underway in full swing. Anup Rau, chief executive, Reliance Life Insurance, said the company had re-filed most of the products and was well prepared to initiate the marketing activities for the re-launch of products in October.
On the group side, too, most products had been re-filed. Aneesh Khanna, head (e-business, marketing and product management), IDBI Federal Life, said two of the company’s group products had recently been approved. “We have started receiving approvals for some of our products; we hope to launch a reasonable number of products by October,” he said.
“We have taken this opportunity to streamline our product portfolio and weed out products that may not be relevant to address the customer of today, as insurance needs have evolved over time,” said Relan of PNB MetLife India. He added the company had re-filed most popular products and hoped to launch these at the earliest. It was considering launching all the popular variants accounting for 98 per cent of its portfolio, in premium terms, he said.
Traditional product guidelines, termed Irda’s most ambitious project, were on the drawing board of Irda’s Hyderabad office since early 2012, during the tenure of former Irda chairman J Hari Narayan.