The Insurance Regulatory and Development Authority of India (IRDAI) has extended the ‘Use and File’ procedure for most of life Insurance products as part of its efforts to make insurance more accessible to the general public.
What it essentially means is that life insurance companies can also launch these products without prior approval of the IRDAI. This comes after the insurance regulator extended similar relaxations for all health insurance products and almost all the general insurance products through a circular dated June 6, 2022.
To know more about the relaxation by IRDAI for general and health insurance products, click here -
“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. 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 in a press statement.
Now, life insurers are expected to have a board-approved product management and pricing policy (BAPMPP). The board shall also constitute a Product Management Committee (PMC), which shall have an appointed actuary, chief risk officer, chief marketing/distribution officer, chief technology officer and chief compliance officer of the insurance company as members. In addition, they will also have an option to include other members of the senior management as invitees. The PMC shall review and approve the products/riders in line with BAPMPP.
The life insurance industry is expected to use this opportunity to respond faster to the emerging market needs, in terms of designing and pricing of insurance products resulting in more choices for the policyholders, which will further help in increasing insurance penetration in India.
Besides, deeper insurance penetration through innovative products that need to be aligned to customer needs and expectations, IRDAI’s move will also call for a stronger product-oriented focus by governance functions within organisations, as the U&F procedure by the regulator places greater reliance on good conduct of the market participants, in this case, the life insurance companies.