More flexibility for insurers as Irdai eases health product approvals

Move will help firms adapt to changing customer preferences

The insurance regulator’s move to permit ‘use and file’ procedure to all health insurance products and nearly all general insurance products will provide greater flexibility to insurance companies in introducing innovative products in the market that suit the changing needs of customers and result in more products in the retail segment.

Currently, the regulatory regime warranted prior approval of the insurance regulator for insurance companies to launch their products in the market, regardless of price not being determined by the regulator.

The move from ‘file and use’ to ‘use and file’ has been a long-standing demand of the insurance sector since product approvals have often faced inordinate delays.

This move is in line with the reforms agenda of the new Chairman of the Insurance Regulatory and Development Authority of India (Irdai) Debasish Panda.

Panda in his interaction with industry players in early April had highlighted that the regulator intends to bring in much-needed changes to the sector. One of them is revamping the product certification process wherein players will be able to follow the system of ‘use and file’ rather than ‘file and use’.

“It is envisaged that these initiatives will enable the insurance industry to launch suitable products in a timely manner,” said Irdai in a statement.

“It will bring about a conceptual change that has been long pending and much-needed to ensure the advancement of the insurance ecosystem. Insurers will now be able to develop new solutions, based on individual preferences and current needs,” said Sanjay Datta, chief-underwriting, claims and reinsurance, ICICI Lombard General Insurance.

Tapan Singhel, managing director and chief executive officer (CEO), Bajaj Allianz General Insurance, said, “Insurers can introduce their products in the market on filing with the regulator, thereby avoiding a longer waiting duration in offering innovative insurance solutions to customers to help address the dynamic environment.”

According to Rakesh Jain, CEO, Reliance General Insurance, this move by Irdai will aid customer centricity and fuel product innovation, furthering insurance penetration in the country.

Bhabatosh Mishra, director-underwriting, products and claims, Niva Bupa Health Insurance, said, “...as the industry has matured, the regulator is trying to bring fresh waves of reform in the sector. This initiative will enable greater flexibility and innovation for insurers to introduce customised products for different customer segments.”

Insurers now need to proceed with caution, notwithstanding the freedom they have been granted.

“The downside could be that insurers launch too many products. This is a chicken-and-egg situation. But the gains outweigh the losses. It is a good move by the regulator. But insurance companies have to be very responsible now,” said the CEO of a private-sector insurer.

“We will now have greater responsibility and opportunity to ensure consistent innovation to develop products based on constant evaluation of customer needs and improved pricing of products for our policyholders. We should take care to design products with customer interest as the paramount objective,” said Dutta.

For health insurance products, the regulator has said that insurance companies will now need to file the product within seven days of launch and obtain a unique identification number.