The growth rate of insurance companies may come down this fiscal and it will take a year before they stabilise, the Insurance Regulatory and Development Authority (Irda) said today.
Irda Chairman J Hari Narayan stated this when asked about the impact of new Ulip norms announced by the regulator last year.
he new norms came in to affect from September 1, 2010.
"There may be negative growth in certain segments. But overall, in terms of the first premia there will be certain growth. But the rate of growth will certainly come down. It may take another year or so before the insurance companies stabilise," Hari Narayan told reporters on the sidelines of a function at the Administrative Staff College of India here.
He said growth may be affected not only due to the developments within the industry but also overall economy. Insurance companies are of the opinion that certain provisions of new ULIP norms like capping of surrender charges and the even distribution of charges over the lock-in period of five years will adversely impact the profitability of companies.
Ulip sales will also be adversely affected as agents may be unwilling to sell products at lower commissions.
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Replying to a question, the regulator said the insurance companies expressed concern over norms on pension products.
"One area which they have expressed concern is pension products. We need to look at the pension products, not re-looking at it but expand the scope of it," Hari Narayan said making it clear that the Irda does not have an intention to review 4.5 per cent return on pension products which according to the industry is unattractive to customers.
He said the draft guidelines of IPO norms for life insurance companies will be issued next month and refused to divulge further details.