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Life insurance companies have filed almost four-five products on an average with the regulator in the last week of February and March to ensure that these products do not come under the “five products a year” proposal implemented from April.
In an attempt to reduce time taken for product approvals, the Insurance Regulatory and Development Authority (Irda) has asked life insurers to submit a ‘product planner’ before the beginning of every financial year. This planner would give an indication of the number of products that the insurer proposes to file each quarter.
Irda has said that if the products to be filed in a financial year exceed five, the insurer should furnish the supporting market research, product-wise persistency for 13th month, 25th month and 37th month as on April 30 of the previous year.
As new product guidelines were implemented for traditional products in January, life insurers were busy refiling those products in the initial few weeks. Now that the basic components of the product portfolio are complete, companies are moving to the next stage of products.
“All the base policies are now approved. Since there could be hurdles of filing more than five products from April, we decided to file products in March itself. However, we do not know how much time it will take for them to be approved, since Irda also has several products lined up for file-and-use,” said the chief actuary of a mid-size life insurer.
The regulator has said that in order to expedite the product approval process, they would require certain information from the insurers to plan for resources available, to support planned filings and to ensure fairness across all the insurers while approving the products.
At present, Irda follows the file- and-use method of application, wherein insurers submit an application to obtain prior approval of the authority to introduce/modify insurance products. These companies are not allowed to sell these products, without Irda confirming in writing and giving approval for the product to be introduced in the market.
Industry players file about 8-10 products and riders each year, which are an addition to their existing product portfolio. With the cap now at five, insurers are concerned that the choice given to a customer might be limited because insurers would not be able to file more than one product in each category (pension, health, group, individual among others).
Added to this is the issue of absence of crucial members at Irda, due to which there are concerns that product approvals will be further delayed.
