IRDAI to soon allow insurance companies to launch combo products. Details here

On June 20, 2023, the Insurance Regulatory and Development Authority of India (IRDAI) announced a significant update. Insurance companies are now permitted to introduce individual and group unit-linked life and health insurance products, as well as combi products, without the need for prior approval from the regulator. The IRDAI circular expands the current “use and file” procedure for life insurance products, broadening its scope and allowing for more flexibility in the industry.

Previously, the “use and file” norms only applied to individual unit-linked insurance plans (ULIPs) that were offered with existing and approved funds. Group ULIPs were excluded from this process. However, with the revised procedure, insurance companies are now allowed to 'use and file' group unit-linked life and health insurance products as well. This change enables insurers to streamline the approval process and offer a wider range of group insurance options.

In addition, the IRDAI has introduced combi products, which are insurance products where life insurance serves as the primary insurer. This development enables customers to obtain comprehensive insurance coverage through a single policy, as insurance companies can now offer bundled products. It is important to note that insurance companies offering combi products must adhere to the existing norms set by the IRDAI, as stated by the regulator. This expansion in product offerings aims to enhance convenience and provide customers with more flexible options for obtaining comprehensive insurance coverage.

The regulator said, “Based on the feedback from Industry and in order to facilitate the insurance industry to promote insurance penetration, it has been decided to further expand the scope of current use and file procedure.”

Sumit Rai, MD & CEO, Edelweiss Tokio Life Insurance shared, “This is a continuation of a series of steps that the regulator has taken to strengthen the insurance penetration in the country. This modification will enable insurers to increase their go-to-market speed and in turn, help them stay in sync with the dynamic demands of today’s customers.”

“We at Aditya Birla Sun Life Insurance, commend IRDAI for its proactive approach in fostering a dynamic insurance landscape. The introduction of comprehensive modifications to the existing 'use and file' procedure for life insurance products exemplifies IRDAI's unwavering commitment to promoting insurance penetration and ensuring the well-being of policyholders," said Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance.

'These changes will bring a host of benefits for policyholders, including increased product options, access to comprehensive combi products, streamlined processes, and a broader range of unit-linked funds. We believe that these enhancements will make life insurance more accessible and empower individuals to protect their future and achieve their financial goals," he added. 

The recent changes implemented by the IRDAI will foster an environment where both traditional insurance companies and emerging insurtech players can introduce innovative combo products that cater to the needs of a substantial portion of the population. These modifications open up opportunities for the industry to develop creative and tailored insurance solutions that effectively address the evolving demands of customers. By encouraging innovation and diversification, the changes aim to promote competition and ultimately enhance the overall insurance experience for a broader range of individuals.

The regulator has also decided to do away with the Segregated Fund Identification Number (SFIN) clearance process for ULIPs, the circular mentioned. However, insurance companies still have to comply with all prudential norms as per Regulation 9 of IRDAI (Investment) Regulations, 2016, as amended from time to time, for each segregated fund and the assets under management (AUMs) of ULIPs, the circular said.

The IRDAI has further permitted the inclusion of new unit-linked funds into existing unit-linked products. Once these new funds are added to either existing or new unit-linked products, they will be regarded as existing funds for future unit-linked products, as outlined by the regulator. This circular is effective immediately, indicating that insurance companies can start implementing these changes without delay. This decision allows for greater flexibility and choice within unit-linked products, enabling insurers to adapt to market demands and offer a wider range of investment options to policyholders.