Irda okays most plans ahead of October deadline

MUMBAI: The Indian Insurance regulator has cleared most of the products filed by various insurance companies before the new norms kick in from October 1. 

Leading life insurance companies, ranging from ICICI Prudential Life Insurance to HDFC Life, had filed close to 12-15 products each while state-run Life Insurance Corporation of India ( LIC) had applied for around 50 products with the Insurance Regulatory & Development Authority (Irda). 

"There were close to 450 products filed with Irda, and it has cleared almost two-third of the proposals," said a company executive. For Irda, the product clearances are handled by the actuarial and the life department, and the large number of approvals have come in the absence of a member actuary. "We have already filed most of our products and started receiving approvals too," said Niraj Shah, senior vice-president, head of products at ICICI Prudential Life Insurance. 

"Recently, we launched a plan in compliance with the new guidelines. We hope to launch a reasonable number of products by October," he added. 

The regulator, in the new norms, has made traditional products at par with unit-linked insurance products, linked commission to policy term, and asked companies to specify the minimum cover, depending on the age of the customer. 

If the customer is under 45 years, the cover will be 10 times the annual premium or 105% of all premiums paid as on the date of death, whichever is higher. Also, products like the highest net asset value guarantee and fundbased guarantee will not be available in the market from October 1. 

Rules of surrender will change and all policies surrendered between the fourth and fifth years will acquire a surrender value of 50% of the total premium paid minus the less survival benefits already paid. 

Products where premium rate, assumptions and benefits do not change, can be certified by the appointed actuary of the company and launched in the market. Delay in clearances can affect the first year income of insurance companies. 

The regulator had given one-month extension for complying with similar norms in group products. The industry is expecting a similar extension for individual category products.

Source : http://economictimes.indiatimes.com