Insurance Regulatory and Development Authority (IRDA) has identified 18 product categories for standardization. This will help insurers to quickly launch their products.
Under the ‘file and use’ mandate, companies are not allowed to launch any product unless it is approved. And product approval takes time. Therefore, IRDA has proposed standardizing some products that can be offered within 15 days of being filed with the IRDA.
As per IRDA, the standard products should be simple, easy to understand and have affordable premium rates. As per proposed system, there should be a ‘standard kit’ which has a standard application form, sales literature and benefit illustrations. However, underwriting, reinsurance and pricing assumptions may have specific ranges, which the insurer can choose based on the target market. This is to enable insurer-specific risk assessment.
IRDA has invited views of Life insurance council on the list of identified products. After the list is finalized, a working group will be constituted to design the products. The product designs may be finalized by the end of November 2012.
In the non-linked products such as life and pension, both participating schemes (which declares the returns in the form of annual bonuses) and non-participating schemes (assured returns) have been identified for standardization.
The other products identified for standardization include money back products (participating and non participating), where the benefits are defined in advance, and term products (with and without return of premium on maturity).
Under linked category, unit-linked life and pension products and variable insurance products (life and pension products), where benefits are linked to any external approved index, have been identified for standardization.
In-group products which are fund-based superannuation products (linked and non-linked), fund-based employee benefit products other than the superannuation products (linked and non-linked), single premium term products (non-linked) and savings product for micro-insurance groups have also been identified.
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