Insurer to alter 270 existing Products
Life insurance companies will re-file around 270 existing products — mostly unit-linked insurance plans (ULIPs) — before July 1, 2010, to comply with the structural changes introduced in ULIPs by the sector regulator.
As a part of the periodic review of regulatory guidelines for various products, the Insurance Regulatory & Development Authority (IRDA) made life cover an integral part of all policies, including pension. Till now, life cover was optional in pension plans. Also, theregulator banned partial withdrawal during the tenure of the policy to encourage long-term savings and accumulation.
In life products, where withdrawal was earlier allowed after three years, policy holders will now be eligible to withdraw only after five years of taking the policy.
“We are modifying the process of re-filing products. Insurance companies will have to re-file all existing products to comply with the new norms,” said a senior IRDA official.
Insurers expect IRDA to give an in-principal approval to sell the revised products. Generally, IRDA takes 30 days to approve any product.
“We have reviewed our product portfolio and will be making the required changes to be fully compliant with the new guidelines before the July deadline. IRDA intends to bring in more focus on life protection and long-term accumulation across ULIPs,” Bharti AXA LifeInsurance Head (Products) Rishi Mathur said.
“These are more of cosmetic changes. It may not require any change in the documentation and the impact will be less,” India First MD & CEO P Nandgopal said.
Last year, when IRDA had capped the overall charges on ULIPs in December, the regulator saw a flurry of filings, mainly for existing plans. IRDA had capped the difference between the net yield and gross yield at three per cent for policies less than ten years and at 2.25 per cent for policies more than ten years.
To streamline the process of re-filing, IRDA had cut the file-and-use procedure time to three days from 30 days. After the cap on the overall charges, 23 lifeinsurance companies had together re-filed around 230 existing ULIPs and another 40 new ULIPs.