IRDAI has recently came out with draft regulations for the designing and pricing of general insurance products with an objective to protect the interest of the policyholders. The proposed regulations provide the basic framework and reflect the fundamental principles to be followed in respect of product design and pricing. It also aims to ensure that the interests of policyholders are protected while promoting efficiency in the conduct of the general insurance business.
The IRDAI (General Insurance Products) Regulations, 2021, which will apply to insurance products as well as add-ons, are aimed at encouraging efficiency in the conduct of the general insurance business, stated the draft.
IRDAI said, “It has been felt necessary to have Regulations governing general insurance products, even while having a provision thereunder for issuance of guidelines for various segments as may be necessary.”
The regulations, if approved, will apply to all general insurance products and add-ons marketed or offered by general insurers.
The proposal said, “The general insurance package product consisting of various covers/sections including Health section/s shall also be covered by these Regulations in so far as non-health covers/sections are concerned.”
Further, it says the design of products should take into consideration the policyholders’ interests in terms of suitability and affordability even while catering to their changing needs through evolving risk coverage. The pricing of products/add-ons should generally be based on appropriate data and/or technical justification, the draft read.
It said, “Insurers, while pricing products/add-ons, have to factor in risk exposure, claim/loss experience, expenses, reinsurance, solvency requirement, and factor in a reasonable amount of surplus and/or economic cost of capital.”
