IRDAI has proposed a uniform pricing model in general insurance policies. With this, general insurance policies like health insurance and motor insurance policies offering similar features and coverage cannot have distinct pricing.
The insurance regulator said that general insurance companies should not charge excessive or inadequate premium from policyholders. It said that differential premium rates should not be allowed to cover similar risks.
Here are other key proposals:
- Policies should clearly specify risks that are covered and excluded
- Product communication should be in simple language to give clarity on terms, coverage and conditions
- Premium calculation should be based on appropriate data and technical justification
- Insurers have to factor in risk exposure, claim/loss experience, expenses, reinsurance and solvency requirement to arrive at premium
- The pricing of the product or add-on should aim at ensuring that the product is viable, generating a reasonable margin without any cross subsidization from any other product
Further, IRDAI has asked insurers to set up a Product Management Committee (PMC) who will be responsible for ensuring product quality, add-on design, proper filing of the products and compliance of regulatory requirements.
