The Insurance Regulatory and Development Authority (IRDA) has asked all life insurance companies to refile all existing products according to its new product design guidelines. As a result, from October onwards, a very little life insurance products can be left in the market.
Â
In a recent letter to CEOs of all insurance companies, the regulator has directed them to complete the refilling of all products by 30th September’ 2012 and to withdraw the products which are based on earlier product design guidelines by 1st October’ 2012.
The life insurers fear that the IRDA is yet to come out with final guidelines on product design, in absence of which the insurers would not be able design any product, due to which it will be very difficult to offer any products either linked or unlinked to customers from October.
ources close to the industry said that it generally takes two weeks to file a product. And the insurer which has numerous products will not be able to file all products within the deadline of three months. And also, the regulator normally takes 2-3 months to approve a product, due to which it would be very difficult to an insurer to offer more than one or two products from October. As a result, this segment of insurance will be adversely affected and the growth of new business premium in the second half of the financial year’ 2012-13 would be lesser.
A senior official of a private life insurance company said, “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.”
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 After the new guidelines on pension plans came into force from December 1 and all the earlier products were to be withdrawn by January 1, the insurance regulator could not approve a single pension product in time.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.
However, a senior IRDA official said that the regulator would issue the final guidelines very soon and the regulator would fast-track the product approval process.
Further he said, “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.”
http://www.insuringindia.com/News/Life-insurance-products-may-be-missed-out-from-October.aspx
