Aviva seeks more regulatory flexibility

Private insurance player, Aviva Life Insurance, India, is asking for more commercial flexibility from the Insurance Regulatory Development Authority (Irda) in India.

Terming the regulatory authority as reactive rather than proactive, the insurer says that due to such regulations in India, their costs of operating are higher by around 25 per cent when compared to their operations in many other countries.

Speaking to Business Standard, Stuart Purdy, managing director, Aviva Life Insurance, India, said, "The Irda, spends too much time on issues like product specifications and sales models. That is why any product clearance takes four to six months in India as compared with other countries like UK, Ireland and Italy where they have general rules for all products and therefore do not take much time to give approvals."

According to Purdy, Aviva launched 42 products in Italy last year as compared to six in India.

"When the authority takes time to give approvals it slows down the growth of the industry as well," he added.

"The regulatory authority in India is expected to be more proactive rather than just reactive. At present, there are no written-down standards in the Indian insurance industry that can be used as general guidelines for any product development," Purdy said.

"This apart, there is no commercial flexibility that insurers have in this country with regard to issues like commission. For instance, the renewal commission is exceptionally high at five per cent on future premiums every year," he added.

According to Purdy, each individual insurer should have his/her choice of commission structures. "Due to such regulations it has become expensive by around 25 per cent, for us to operate in India," Purdy said.

Aviva Plc has operations in various countries ranging from UK and China to Turkey and Ireland.