New norms will expedite nod for insurance products

New traditional product guidelines, which are expected in the next few days, will make the process of product approvals quicker.

According to J Hari Narayan, chairman of the Insurance Regulatory and Development Authority (Irda), approvals would now become faster, since the product structures would be clearly defined by the new regulations.

The Irda board has approved the product guidelines and these are expected to be published in the gazette within a week. The guidelines have proposed changes in the product structure, including the surrender charges and commission rates, in order to make traditional products more transparent.

GUIDELINES GAZETTE

• The Irda board approved the product guidelines. These are expected to be published in the gazette in a week
   
• The product guidelines have proposed changes in the product structure, including the surrender charges and commission rates, to make traditional products more transparent
   
• The guidelines for traditional products of life insurers will have a deadline of April 1 for re-filing of group products, and July 1 for re-filing other traditional products
   
• The recent draft on traditional product norms said policy holders would get back as much as 50 per cent of their premiums, if a policy is active for three years

 

“On an average, we have been approving 20 products a month. Post the issuance of the guidelines, we are hoping it would lead to quicker approvals for traditional products,” said the Irda chief.

He added this would be due to the fact that the products would be clearer in their features. Usually, product approvals may take time due to ongoing discussions between the insurance company and the regulator over clarity in a particular product.

Narayan explained that this was seen in the unit-linked insurance (Ulip) products after the new guidelines were issued. After the September 2010 norms were announced for Ulips, insurers could clearly understand what could be a product feature and what could not be. Hence, approvals came in at a much quicker pace for these Ulip products. “We hope there will be a similar case with traditional products, too, post new norms come out,” he said.

Further, the Irda chief said not all products would have to be re-filed. If there were only one or two changes in the product feature, he said that a company could do it on their own. “A company can make those changes and issue a certificate saying those changes have been made, as per the new norms. They need not get any approvals from us for selling these products.”

The guidelines for traditional products of life insurers will have a deadline of April 1 for re-filing group products and July 1 for re-filing other traditional products.

The most recent draft on traditional product norms says policy holders will get back as much as 50 per cent of their premiums if a policy is active for three years, meaning the policy has a minimum guaranteed surrender value (GSV) of 50 per cent.

Minimum GSV is a sum of guaranteed surrender value and the surrender value of the any subsisting bonus already attached to the policy.