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Life insurers to be left with few products by October

Normally, insurance company takes about 15 to 20 days to file a product with IRDA, while the regulator would take maximum 90 days to approve the product

June 21, 2012 1:16 IST | India Infoline News Service
It is expected that by October, life insurance industry would be left with a few products as IRDA (Insurance Regulatory and Development Authority) has asked insurance companies to refile their existing products according to the regulator’s new product design guidelines.

In early June, the regulator said that it is very concerned over the mis-selling of life insurance products by insurers. Keeping consumers’ interest in mind, the insurance watch dog has decided to bring product designing guidelines. However at present, no information is available on when IRDA will issue its final guideline.

In a recent letter to the chief executive officers of all life insurers, IRDA has said the refiling has to be done by September 30. It has directed that insurers withdraw by October 1 all the existing products based on the earlier guidelines.
However, no information is available on final guidelines on product design. This has led to concerns among the insurers that they would be unable to offer any products—whether linked or non-linked—to customers from October.

Besides, the process of approving products by the regulator takes time. Pankaaj Maalde, head-financial planning, ApnaPaisa, says, “Normally, insurance company takes about 15 to 20 days to file a product with IRDA, while the regulator would take maximum 90 days to approve the product.”

Considering an insurer typically has more than 25 products in its portfolio, it is very difficult to refile all the products within 90 days. Also, taking into consideration that product approval takes 60-90 days, there may be just one or two products an insurer would be able to offer from October. According to insurers, this would highly affect the growth of new business premium in the second half of the fiscal.
 

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