 "Life insurers rush for product approvals amid tight deadline")
On October 1, all life insurers are required to be ready with new bouquet of products to be made available to customers. With the deadline merely 15 days away, life insurance companies are leaving no stone unturned to ensure that their products are out in the market on time.
Insurance Regulatory and Development Authority (Irda) bought out the traditional product guidelines in February this year, which mandated life insurers to be complaint with the new norms by October 1, 2013. Their existing products are being re-filed with the regulator.
Rajesh Relan, MD & Country Manager, PNB MetLife India said that post re-filing there are multiple rounds of communications and clarifications between the company and the regulator.
Though some companies may have some more products to file, others are well ahead. Sanjay Tiwari, Vice President, Products, HDFC Life said that the company is looking to have a fairly balanced portfolio between traditional and unit-linked products.
“We began refilling long ago and hence had a fairly clear view of what the product portfolio will be like,” he said.
In June itself, 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 limited premium payment term.
The new traditional product guidelines said that minimum guaranteed surrender value would be 30% of the total premiums paid less any survival benefits paid, if policy is surrendered in the second and third year. If surrendered in the fourth year, it would be 70% of the total premiums paid less any survival benefits already paid.
If surrendered during the fifth to the seventh policy year, it would be 90% of total premiums paid, less any survival benefits already paid," the norms said. The surrender value beyond the seventh year would need to be filed by the insurer under the File & Use for clearance.
Industry officials said that the companies would have ideally liked more time to re-launch the entire portfolio as training, back-end processes, marketing material development requires a lot of time. However, Irda is not expected to extend the deadline.
The regulator, however, did extend the deadline for group products. The group products which were not compliant to the new guidelines were to be withdrawn from July 1. Later, this deadline was extended to August 1.
V Viswanand, Director & Head Product Solutions Management, Max Life Insurance said that they have re-filed 20 products in all comprising of individual, group and riders already with the regulator and received approvals on 10 of them till date which account for 25-30% of the sales plan.
“Currently we have 43 products/riders in our combined portfolio of group and individual products and not all of them will be replaced by Oct 1, 2013, due to the stringent deadline,” he said.
The commission structure also has been altered by Irda in these norms. The ceiling for first year commissions has been put at 15% for the first year for a 5 year term, 30% for 10 years and 35% for 12 years or more (40% for insurers aged less than 10 years).
Irda has also geared to up for the approval process of the barrage of products up for clearance. Sudhin Roy Chowdhury, Member (Life) of Irda had earlier told reporters that Irda has geared up for the product re-filing process by engaging additional staff in product approvals.
Insurers, who began the re-filing process as soon as the announcement came, have been better placed. Niraj Shah, SVP & Head-Products, ICICI Prudential Life Insurance said that they started filing quite early and most of their products have 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,” he said.
Irda has fixed the minimum death benefit at highest of 125% of the single premium or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, for single premium products.
For other products, it will be highest of 10 times the annualised premium or 105% of all premiums paid on date on death, or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death.
Apart from re-filing, the sales and marketing activities are also in full swing. Anup Rau, CEO, Reliance Life Insurance said that they have re-filed most of the products and are well prepared to initiate the marketing activities for the re-launch of products in October.
On the group side too, most products have been re-filed. Aneesh Khanna, Head-eBusiness, Marketing & Product Management, IDBI Federal Life explained that two of their group products were approved recently and we have launched the same.
“We have started receiving approvals on some of our products; we hope to launch a reasonable number of products by October,” said Khanna.
Instead of filing all the products for approvals, insurers are considering to file only relevant products for customers.
“We have taken this opportunity to streamline our product portfolio and weed out the products which may not be relevant to address the customer of today as insurance needs have evolved over time,” said Relan of PNB MetLife India.
He said that they have re-filed most of our popular products and are hoping to launch them at the earliest post approvals, adding that they are looking at launching all the popular variants covering 98% of our portfolio in premium terms
The traditional product guidelines, termed as the most ambitious project of the insurance regulator, was on the drawing-board at the Irda office in Hyderabad, since early 2012 during the tenure of former Irda chairman J Hari Narayan.
Insurance Regulatory and Development Authority (Irda) bought out the traditional product guidelines in February this year, which mandated life insurers to be complaint with the new norms by October 1, 2013. Their existing products are being re-filed with the regulator.
Rajesh Relan, MD & Country Manager, PNB MetLife India said that post re-filing there are multiple rounds of communications and clarifications between the company and the regulator.
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He said that post approval, companies will have to train the sales team and start the marketing related activities. In addition, there is new compliance related guideline, which requires companies to get the system setup of the products signed off by the Board before launch.
Though some companies may have some more products to file, others are well ahead. Sanjay Tiwari, Vice President, Products, HDFC Life said that the company is looking to have a fairly balanced portfolio between traditional and unit-linked products.
“We began refilling long ago and hence had a fairly clear view of what the product portfolio will be like,” he said.
In June itself, 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 limited premium payment term.
The new traditional product guidelines said that minimum guaranteed surrender value would be 30% of the total premiums paid less any survival benefits paid, if policy is surrendered in the second and third year. If surrendered in the fourth year, it would be 70% of the total premiums paid less any survival benefits already paid.
If surrendered during the fifth to the seventh policy year, it would be 90% of total premiums paid, less any survival benefits already paid," the norms said. The surrender value beyond the seventh year would need to be filed by the insurer under the File & Use for clearance.
Industry officials said that the companies would have ideally liked more time to re-launch the entire portfolio as training, back-end processes, marketing material development requires a lot of time. However, Irda is not expected to extend the deadline.
The regulator, however, did extend the deadline for group products. The group products which were not compliant to the new guidelines were to be withdrawn from July 1. Later, this deadline was extended to August 1.
V Viswanand, Director & Head Product Solutions Management, Max Life Insurance said that they have re-filed 20 products in all comprising of individual, group and riders already with the regulator and received approvals on 10 of them till date which account for 25-30% of the sales plan.
“Currently we have 43 products/riders in our combined portfolio of group and individual products and not all of them will be replaced by Oct 1, 2013, due to the stringent deadline,” he said.
The commission structure also has been altered by Irda in these norms. The ceiling for first year commissions has been put at 15% for the first year for a 5 year term, 30% for 10 years and 35% for 12 years or more (40% for insurers aged less than 10 years).
Irda has also geared to up for the approval process of the barrage of products up for clearance. Sudhin Roy Chowdhury, Member (Life) of Irda had earlier told reporters that Irda has geared up for the product re-filing process by engaging additional staff in product approvals.
Insurers, who began the re-filing process as soon as the announcement came, have been better placed. Niraj Shah, SVP & Head-Products, ICICI Prudential Life Insurance said that they started filing quite early and most of their products have 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,” he said.
Irda has fixed the minimum death benefit at highest of 125% of the single premium or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, for single premium products.
For other products, it will be highest of 10 times the annualised premium or 105% of all premiums paid on date on death, or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death.
Apart from re-filing, the sales and marketing activities are also in full swing. Anup Rau, CEO, Reliance Life Insurance said that they have re-filed most of the products and are well prepared to initiate the marketing activities for the re-launch of products in October.
On the group side too, most products have been re-filed. Aneesh Khanna, Head-eBusiness, Marketing & Product Management, IDBI Federal Life explained that two of their group products were approved recently and we have launched the same.
“We have started receiving approvals on some of our products; we hope to launch a reasonable number of products by October,” said Khanna.
Instead of filing all the products for approvals, insurers are considering to file only relevant products for customers.
“We have taken this opportunity to streamline our product portfolio and weed out the products which may not be relevant to address the customer of today as insurance needs have evolved over time,” said Relan of PNB MetLife India.
He said that they have re-filed most of our popular products and are hoping to launch them at the earliest post approvals, adding that they are looking at launching all the popular variants covering 98% of our portfolio in premium terms
The traditional product guidelines, termed as the most ambitious project of the insurance regulator, was on the drawing-board at the Irda office in Hyderabad, since early 2012 during the tenure of former Irda chairman J Hari Narayan.