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After IRDAI allowed health and general insurers to follow ‘use and file’ norms, it has opened gate for innovations in life insurance policies too.
IRDAI has allowed life insurance companies to follow ‘use and file’ guidelines i.e. they can launch a new policy in the market and apply for approval within a certain time frame later.
The ‘use and file’ gives flexibility to insurers to launch customized and innovative products and fix up its premium price.
With this, life insurers can introduce new products in individual term policies, ULIPs, group term and riders including term, accidental death, disability, critical illness and terminal illness.
However, life insurers cannot make changes to traditional policies like endowment and money back policies.
In a circular, IRDAI said, “This move will enable life insurers to launch most of the products (except individual savings, individual pensions and annuity) in a timely manner according to the dynamic needs of the market. This will result in improving ease of doing business for the insurers and also lead to expansion of the choices available to the policyholders.”
Further, IRDAI has clarified life insurers will have to get their new products approved from the Board. The insurance regulator said, “The life insurers are expected to have a board approved product management and pricing policy (BAPMPP). The Board shall also constitute a Product Management Committee (PMC), which shall have Appointed Actuary, Chief Risk Officer, Chief Marketing/Distribution Officer, Chief Technology Officer and Chief Compliance Officer of the insurer as members and also an option to include other members of its senior management as invitees. The PMC shall review and approve the products/riders in line with BAPMPP.”
Kapil Mehta, Co-Founder, SecureNow Insurance Broker feels that the move will encourage the industry to come out with innovative solutions. He said, “It is an excellent step because the product approval process has been very simplified. The insurers are responsible for new products and need to just inform the IRDAI after launch. The IRDAI has specified the boundaries or principles for all products so that policyholder interests are not compromised. I think this will result in many new life products and variants being introduced.”