"The Insurance Advisory Committee (IAC) had already considered these guidelines at the last meeting. As per the procedure, it has to be placed before the authority which is meeting on February 8 after which it will be gazetted," Irda chairman J Hari Narayan said here today.
Refusing to accept that the timing for such guidelines was not right in the light of a slowdown in life insurance business, Hari Narayan said it would, in fact, be good to bring out a new model when the industry was down.
The authority has been working on new design templates for various insurance products after taking a critical view on the current industry practices. For instance, a life insurance product should have a guaranteed death benefit while a pension product must provide stipulated annuity, it had earlier said.
On a question, the chairman said the new products being launched by insurance companies were largely in line with the spirit of the new guidelines.
He also said the 'highest Net Asset Value (NAV) guaranteed products' would be withdrawn once the new guidelines come into effect as these could easily mislead the consumer into what he is buying in relation to his expectation.
"What is deemed to be the highest NAV guaranteed products should not be confused with what is the highest index or how the market is performing. A NAV product tends to become a debt product to maintain that guaranteed NAV. As far as the marketing of these product goes, the consumer is left with a feeling that it grows along with the market or is somehow linked with the Sensex," Hari Narayan said.
The new guidelines will have a provision for staggered implementation for the companies to readjust their processes, while companies will continue to service the policies that they have already sold, according to him.
Insurance business to touch Rs 20 lakh crore this year
The total life insurance business is likely to touch Rs 20 lakh crore in the current financial year as compared with Rs 18 lakh crore as on March 2012, according to the Irda chairman. Total assets under management of the insurance companies stood at Rs 8 lakh crore in 2008, the year when Hari Narayan took over as chairman. When the industry was opened up for the private sector in 2000, the insurance business was Rs 1 lakh crore. Hari Narayan is set to retire later this month.
The non-life sector, which accounts for about Rs 4.5 lakh crore of the total insurance business, is exceeding the expectations in terms of growth and is likely to post around 18% year on year growth. Life insurance, which accounts for the largest chunk of the business, is however, facing problems.
"There was a marginal decrease in the life insurance business in the third quarter compared with last year. What is encouraging is, single multi pay premiums have increased significantly. FY13 will be more or less flat in terms of growth on the life side," he said.
