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  • News From Press IRDAI crackdown on ‘participating products’ may impact profitability

    IRDAI crackdown on ‘participating products’ may impact profitability

    Source: BusinessLine Feb 19, 2016

    Profitability of life insurers is likely to be impacted as the insurance regulator plans to crack down on participating products, which constitute the majority of their present sales.

    Participating products are essentially non-guaranteed products, where the insured gets a ‘profit or loss’ that the insurer generates by investing the premium collected.

    According to industry experts, participating products currently constitute about 70 per cent of industry sales. While the Insurance Regulatory and Development Authority of India (IRDAI), over the last two years, had come out with a series of regulations to streamline other product categories, such as unit-linked insurance products (ULIPs), most life insurers had shifted to selling participating products due to better margins.

    Asked about the regulatory action on participating products, Nilesh Sathe, Member-Life of IRDAI, said the regulator will be shortly coming out with final guidelines on expenses limit to take care of participating products.

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