The regulator has directed all insurers to be ready to re-file their existing products according to its new product design guidelines. All products filed under earlier norms will have to be withdrawn by 1st October.
All existing products based on earlier norms will have to be withdrawn by 1st October. This new regulation has caught the industry off-guard because many insurers offer as many as 20 products. It takes a minimum of two weeks to get an official clearance from IRDA for a product. Insurers will find it extremely difficult to re-file all their products in such a short notice.
The regulator is yet to announce the detailed product design guidelines. A few big players are thinking of re-filling the products which generate the maximum revenue. But at this stage, the industry is not clear if it would be allowed to do so.
“We have to formulate some strategy which will help us to meet IRDA’s regulations and not affect our business. We are worried that the new regulation might hamper our business,” saysthe CFO of a top life insurer.
Most of the insurers are worried that their bottom-line might be affected because of the guidelines that would be issued by the regulator. The industry expects a strict future product design rule which would send insurers back to the drawing board. For instance, after the new ULIP norms were announced, most of the companies shifted their focus to traditional plans as the profit margins from ULIPs came down sharply.