Insurance Non-life policies will come with product suitability labelling

Non-life policies will come with product suitability labelling

General insurers will have to classify if their policy is suitable for retail or institutional clients
Rosevina Gonsalves May 5, 2017

Now health and motor insurance policies will have product suitability labels.

IRDAI has asked non-life insurers to classify their products into two broad categories based on suitability  – retail and commercial.

In a circular, the insurance regulator said, “The general insurance products shall be classified into two broad classifications, namely Retail products and Commercial products. Both of these classifications are based on ‘who buys the product’.”

In case the product is suitable for both, insurers will have to use prefix and suffix. “General insurance products that are classified as both retail and commercial need to be distinguished from one another with a suitable name change or prefix or suffix as the case may be and need to have a separate unique identification Number (UIN),” IRDAI said.

K.G. Krishnamoorthy Rao, CEO, Future Generali India Life and General Insurance, believes that the move will help investors to understand the product. He further said that retail policies would become more transparent now. “Since IRDAI has mandated that policies falling under retail category have to follow file-and-use principle, i.e., taking prior approval of IRDAI before its launch, it will safeguard policyholder’s interest.”

The insurance regulator has mandated insurers to ensure compliance with norms before October 1, 2017.

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