The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India, said IRDAI
New Delhi:
The Insurance Regulatory and Development Authority of India (IRDAI) on Wednesday has extended the ‘Use and File’ procedure for all the health Insurance products and almost all the general insurance products in line with the reforms agenda taken up towards having a fully insured India.
It is envisaged that these initiatives will enable the insurance industry in launching suitable products in a timely manner, said the IRDAI.
However, insurers have to file the proposed name of the product, date of approval by the insurer’s product management committee with the IRDAI within seven days of launch of the product, IRDAI notified.
Commenting on the Irdai’s move, Bajaj Allianz General Insurance MD and CEO Tapan Singhel said the proactive initiative by the regulator will provide some necessary mechanisms to insurance companies which wish to bring out more innovative products in the market at a faster frequency.
”Use and File procedure essentially means that insurers can introduce their products to the market on filing with the regulator thus avoiding a long waiting duration in offering innovative insurance solutions to customers in order to help address the dynamic environment,” he said.
Sanjay Dutta, Chief – Underwriting & Claims, ICICI Lombard, GIC, said, “The IRDAI’s announcement will bring around a conceptual change that has been long pending and much-needed to ensure advancement of the insurance ecosystem. Insurers will now be able to develop new solutions based on individual preferences and current needs.”
However, insurers will now have a greater responsibility and opportunity to ensure consistent innovation to develop products based on constant evaluation of customer need and improved pricing of products for our policy holders, he said.
“We at ManipalCigna, welcome the regulatory move as this will help foster innovation in product development and the products will get introduced to customers in a timely manner. The reforms will further reduce the human intervention thereby, cutting down on the cumbersome waiting period that will ease the process, help the suitable products to reach the untapped geographies and enable their launch in a faster and efficient manner,”Prasun Sikdar, MD & CEO – ManipalCigna Health Insurance Company.
‘An excellent step in my view,” he added. Shanai Ghosh, Executive Director and CEO, Edelweiss General Insurance, said the announcement has empowered insurers as the entire process of product approval and launch has been simplified, thereby addressing a key challenge faced by insurers.
”While the move provides for speedy introduction of innovative products, insurers will now have a greater responsibility to ensure robust product development and pricing along with policyholder protection,” Ghosh added.
IRDAI has also prescribed following `dos and don’ts’ for the insurers while opting for “use and file” products.
-Insurers should ensure that the product pricing is viable, self-sustainable and affordable to the targeted market.
-The revision in the price, if any, shall be effected only based on the underlying claims experience (Incurred Claims Ratio) and to make the product viable and self-sustainable. Insurers shall disclose the rationale for revision in price along with the underlying claim experience (Incurred Claims Ratio) of the product that lead to the revision in the price in their website.
-Where optional covers or add-ons are offered with very low premium rates giving an indication that coverage is not material under the said add-on or optional cover, insurers are advised to consider subsuming such add-ons or optional covers into base cover of the product.
-Pricing of the products/add-ons should be based on the generally accepted actuarial principles.
– The premium rates shall appropriately reflect the benefits, terms and conditions of the underlying products/add-ons and shall not be discriminatory,
-Management expenses loading for add-ons to be considered on marginal basis. No two risks with identical risk characteristics should be be rated differently,
-The insurer shall build-up, maintain and monitor the experience under all the base and add-on covers separately,
All categories of the products, namely, Pilot Products, Health plus Life Combi Products and Health Package Products are also allowed to be launched under the above procedure. Non-life package products where UIN is already obtained for non-life covers are also permitted to be launched in accordance to the specified norms, said the IRDAI.
This is a stepping stone towards improving the ease of doing business in the insurance sector by moving from the current regime requiring prior approval for launching the products to a regime where products could be launched without any prior approval, added the IRDAI.
The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India, said the IRDAI.
IRDAI has asked insurers to place the board approved policy of products that are to be offered or modified / revised which should address issues including the philosophy of the company in enhancing the insurance penetration, the health insurance needs of the insurable population, provision of inclusive insurance to all the market segments and the need for providing simple and easily comprehensible products.
Where any Insurer is found to be non-compliant with the extant regulations or guidelines, IRDAI will direct the insurer to withdraw the product.