Life insurers get flexibility in fixing premium

With a view to provide flexibility to insurance companies, the Insurance Regulatory and Development Authority (IRDA) has said that life insurers will be allowed to change the premium quotes from what they have filed with the regulator for group business.

The quotes, however, have to be approved by the appointed actuary and will apply for annually renewable pure life cover.

For immediate annuity polices "" both group and individual "" life insurance companies will have to follow the current procedure of obtaining approval from the regulator whenever new products are introduced in the market.

Subsequent to the introduction of these products, life insurers will be allowed to vary annuity rates in the range of 10 per cent from what has been filed.

In case the insurers want to change the premium rates beyond 10 per cent, the approval of the regulator will be required.

"Very often, according to interest rate scenarios, life insurers have to change the annuity rates quickly so as to have an efficient asset- liability management. The current dispensation proposed here will enable the companies in this direction," said R Kannan, member actuary of the IRDA.

At present, life insurers have to follow the file-and-use procedure for introducing a new product or making changes in products. The proposed measures will come into effect from next month.

"This circular gives more freedom to insurance companies in pricing the products but adds responsibility also, since the actuarial valuation needs to be accurate. At a time when the interest rate scenario ""both in global and in the Indian market "" is changing rapidly, it gives an opportunity to the market players (insurance companies) to react promptly in managing their assets and liabilities," Kannan added.