Life insurance products may go missing from Oct
Come October, the life insurance industry may be left with only a handful of products, as the regulator wants companies to ‘refile’ all existing products according to its new product design guidelines.
In a recent letter to the CEOs of all life insurance firms, the Insurance Regulatory and Development Authority (Irda) has said the refiling has to be done by September 30 this year. The regulator has directed that insurers withdraw by October 1 all the existing products based on the earlier guidelines.
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What queers the pitch for life insurance companies further is that the Irda is yet to come out with the final guidelines on product designs, leading to fears that the industry would not be able to offer any products — whether linked or non-linked — to customers from October. Besides, the Irda is not exactly known for clearing products fast.
Industry sources point out that it generally takes about two weeks to file a product. Considering an insurer typically has more than 25 products in its portfolio, it is virtually impossible to refile all the products within three months. Also, given that the Irda takes at least 60-90 days to approve a product, there may be at best one or two products an insurer would be able to offer from October. This, they believe, would adversely impact the growth of new business premium in the second half of the financial year.
“There are no pension plans in the market today, as the regulator is yet to approve any products based on the new guidelines. Now, it is doubtful how many products the regulator would be able to approve in time, even if we refile the existing products," said a senior insurance official at a private life insurance company.
The situation is similar to what pension plans had to go through. After the new guidelines on pension plans came into force from December 1 and all the earlier products were to be withdrawn by January 1, the insurance regulator could not approve a single pension product in time. The impasse continues in the pension sector, as the Irda is yet to approve any products on the new, revised guidelines. As a result, there are no pension products in the market today.
When contacted, a senior Irda official said it would issue the final guidelines soon and the regulator would fast-track the product approval process. “We are trying to fast-track the product approval process. If the insurers refile in time, we would approve the products as soon as possible," he said on condition of anonymity.