The Insurance Regulatory and Development Authority of India (IRDAI) recently said that life insurance companies can now launch their products without prior approval. The announcement came just a few days after the regulator permitted General and health insurance companies to “Use and File”, i.e. launch the product first and then file it with the regulator.
“In its continuous endeavor towards the reform agenda taken up towards having a fully insured India, Insurance Regulatory and Development Authority of India (IRDAI) has extended the ‘Use and File’ procedure for most of the Life Insurance products. This means now the life insurance companies can also launch these products without prior approval of IRDAI,” the regulator said in a statement last week.
Experts say that the IRDAI decision is a progressive one. It will provide momentum to the industry.
“This is a forward-looking and progressive move for the industry as the principle-based approach encourages insurers to be more responsible and innovative in their product designs. It will add momentum to the insurance sector as we will respond faster to emerging market needs, both in terms of designing and pricing,” said Subhrajit Mukhopadhyay, Executive Director, Edelweiss Tokio Life.
“This will significantly improve the time to market by reducing the time between the conception and actual launch of a product, thus, enabling insurers to respond to the dynamic needs of the market at a quicker pace, especially in the present digital age where the needs of the customers are consistently evolving. This is another important step towards improving insurance penetration in India,” he added.
Earlier on the 1st of June, IRDAI had extended similar relaxations to all the Health Insurance products and almost all the General Insurance products.
Explaining the need to provide the relaxation to insurers in launching new products, the IRDAI said, “Earlier when the industry was in a 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.”
What is not allowed
With the new relaxation, Life Insurance companies will be able to launch most of their products. However, prior approval would be necessary for Individual Savings, Individual Pensions and Annuity plans.
“This 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. This will result in improving ease of doing business for the insurers and also lead to expansion of the choices available to the policyholders,” IRDAI said.
The regulator further said that life insurers are expected to have a Board approved product management and pricing policy (BAPMPP).