With Insurance Regulatory and Development Authority (IRDA) asking insurers to file a ‘product planner’ each year, life insurers say that the IRDA’s proposal to limit number of new products every year to five may be challenging.
This, according to them, would be inadequate, since the product categories are varied and they would need to re-file products following new traditional product norms.
IRDA has asked insurers to indicate the number of products that they are planning to file each quarter. It also said that if the products to be filed in a financial year exceed five, the insurer should furnish the supporting market research, product-wise persistency for 13th month, 25th month and 37th month as on April 30th of the previous year. For 2013-14, insurers have been asked to submit the ‘product planner’ on or before 30 April 2013.
In February, IRDA published traditional product guidelines, which called for non-linked variable insurance products (index-linked products) to be treated at par with Unit-Linked Insurance Plan (ULIPs). The insurers have been given time till 30 June 2013, and 30 September 2013 to re-file their group and individual products, respectively.
Insurers believe that apart from re-filing products under new norms, they have a large product category and merely five products a year would be restrictive.
Insurers say that due to regulatory changes and change in market dynamics, it is difficult for the industry to plan a product calendar.
Depending on the size of the life insurance company, approximately 8 to 10 products are filed by insurer each year, in the area of individual, group, health and pension among others. If the products to be filed are capped at five per year, insurers would not be able to file more than one product in each category.
Insurers also say that this may be a constraint for new insurance companies, who do not have a complete product portfolio. Some exceptions need to be made for them, to enable them to file more than five products each year.
While this decision may expedite product approvals in the long run, implementing it this year would be a difficult task for insurers.
There is yet, no clarity whether riders would be included in this planner, as a separate product. If riders are included as separate products, it would be more difficult to file for new products, since insurers introduce additional riders on existing products.
Life insurers are expecting some modifications in this decision, to boost their business. Insurers say that they would prefer a mechanism where the regulator puts a limit of five products a year in the individual category. Group products and riders should be kept out of this.
Further, insurers are also hoping that IRDA does not put a mandatory limit of five products. IRDA should define a range of number of new products (not riders) to be filed every year that companies should adhere to. A definitive limit on the number of products would be detrimental to the industry.
