As the deadline for life insurers to re-file their products nears, life insurance companies are awaiting approvals from the Insurance Regulatory and Development Authority (IRDA) for traditional products, which constitutes for a major part of their product portfolio.
According to the IRDA guidelines, life insurers are required to realign all their existing products by first October 2013 and withdraw those that are not approved by the IRDA. The new structure prescribes higher insurance cover plus other benefits, such as higher minimum surrender value and death benefit.
The IRDA has said that it is working overtime and will ensure that each company has at least 2-3 of its popular products to sell after October first. IRDA is granting priority-wise approval to life insurance companies and has approved 300 products so far. IRDA will approve 90 products by next week and remaining 60 products by October.
While private life insurance companies have got almost all their Unit-Linked Insurance Plan (ULIPs) approved by the IRDA, they are still awaiting for the approval for the popular endowment and traditional products which constitutes more than 50% of their portfolio.
Kotak Life Insurance, for instance, has got approval for all its ULIPs, but has got only one product approved under the traditional product platform which constitutes 85% of its portfolio.
On behalf of the industry, the Life Insurance Council has asked the IRDA to extend the October first deadline.
Insurers say that product re-filing is one part of the process as after re-filing there are multiple rounds of communication and clarification between the company and the regulator. After approval, companies will have to train the sales team and start marketing-related activities.
HDFC Life Insurance Company has launched four products that are compliant with new regulations.
vinay mohanty
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