(PTI) Regulator Irdai on Friday permitted life insurers to launch products without prior approval, thus giving them greater leeway in designing and pricing of insurance covers in line with market needs.
This comes days after the Insurance Regulatory and Development Authority of India (Irdai) extending similar relaxations to health insurance products as well as general insurance covers.
At present, all life insurance products and riders require prior approval of the Irdai before launch. However, certain specified modifications are allowed to be carried out through 'Use & File' process.
The regulator, in a release, said that in its continuous endeavour towards the reform agenda taken up towards having a fully insured India, Irdai has extended the 'Use and File' procedure for most of the life insurance products.
"In order to facilitate the life insurance industry to respond faster to the emerging market needs, in terms of designing and pricing of insurance products and to promote ease of doing business, it is decided to expand the scope of Use & File procedure for life insurance products," a Irdai circular said.
This means now the life insurance companies can also launch these products without prior approval of Irdai, the release said.
It further said the move will enable life insurers to launch most of the products (except individual savings, individual pensions and annuity) in a timely manner according to the dynamic needs of the market.
Irdai expects the decision will result in improving ease of doing business for the insurers and also lead to expansion of the choices available to policyholders.
Commenting on the Irdai's circular, Ashish K Srivastava, MD and CEO, PNB MetLife, said this is a positive move which will enable the growth of insurance by facilitating more innovation and providing a greater choice of solutions that help people plan for their futures.
Kapil Mehta, co-founder, SecureNow Insurance Broker, opined that it is an excellent step because the product approval process has been very simplified.
"The insurers are responsible for new products and need to just inform the Irdai after launch. The Irdai has specified the boundaries or principles for all products so that policyholder interests are not compromised," Mehta said.
Surjendu Kuila, co-founder and CEO, Zopper, said the move will also allow the insurance carriers and the underwriters to do a controlled pilot and sense the product adoption.
The 'Use and File' method will help insurers to design bite size insurance products for the embedded insurance space much faster, thereby manufacturing niche products for various customer segments, Kuila added.
Irdai said the life insurers are expected to have a board-approved product management and pricing policy.
The board will have to also constitute a Product Management Committee (PMC), comprising appointed actuary, chief risk officer, chief marketing/distribution officer, chief technology officer and chief compliance officer of the insurer as members, and also an option to include other members of its senior management as invitees.
The PMC will review and approve the products/riders in line with BAPMPP (Board-Approved Product Management and Pricing Policy).
Earlier when the industry was in nascent stage, it was made mandatory for the insurance companies to take prior approval before launching any life insurance product.
However, with the maturity attained by the industry, it is envisaged that necessary relaxations may be allowed, the regulator said.