The Insurance Regulatory and Development Authority (Irda) has identified 18 products categories for standardisation. Product standardisation has been considered for the File and Use mandate as product approvals in the industry was taking time. This lead to companies not being able to offer products as insurers could offer product till it was approved. So, the regulator has proposed standardising some products that can be offered in 15 days of being filed with the regulator.
In case of non-linked products life and pension products, both participating (that declare returns in the form of annual bonuses) and non-participating (that promise assured returns) where benefits are defined in advance (endowment type of policies) and where benefits accumulate over term of the contract (variable insurance products). Money back products have also been identified (participating and non-participating) where the benefits are defined in advance and term products (with and without return of premium on maturity).
Under linked category, unit-linked life and pension products and variable insurance products (life and pension products) where the benefits are linked to any external approved index have been identified for standardisation.
Lastly, in group products which are fund based superannuation products (linked and non-linked), fund based employee benefit products other than the superannuation products (linked and non-linked), single premium term products (non-linked) and savings product for micro insurance groups have been identified, as per Irda's letter to Life Insurance Council's General Secretary V Manickam.
According to the regulator, the standard products should be simple, easily understandable with affordable premium rates. The 'Standard Kit' as part of this proposed system shall include standard application. However, to enable insurer specific risk assessment, underwriting, reinsurance and pricing assumptions, may have specific ranges which the insurer would choose based on the target market. Sales literature, benefit illustrations and proposal form should also be standard.
The Life Insurance Council has been asked to give its views on the list of the products identified. After the list has been finalised, a working group will be constituted to design the products. These product designs may be finalised by the end of November.