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In a significant move, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to launch individual and group ULIPs (unit linked insurance plans) and combi plans — combination of life and health insurance plans — without seeking prior approval from the regulator.
Combi products will be offered under the use-and-file procedure without the prior nod of the insurance regulator.
According to IRDAI, in combi products, life insurer is a lead insurer and such Combi products should comply with the extant norms. “Based on the feedback from Industry and in order to facilitate the insurance industry to promote insurance penetration, it has been decided to further expand the scope of current use-and-file procedure,” the regulator said.
With the IRDAI now allowing combi product offerings, life and non-life companies can offer bundled products. Insurers can offer term insurance and health insurance covers through the same product, thereby easing the process for policyholders.
The regulator has also decided to do away with the Segregated Fund Identification Number (SFIN) clearance process for Ulips, the circular said.
Sumit Rai, MD & CEO Edelweiss Tokio Life Insurance, said, “This is a continuation of a series of steps that the regulator has taken to strengthen the insurance penetration in the country. This modification will enable insurers to increase their go-to-market speed and in turn, help them stay in sync with the dynamic demands of today’s customers.”
With the introduction of the use and file process, the insurers can immediately introduce their products to the market on filing with the regulator, thus avoiding a long waiting duration to get approvals for their products.
ULIP is an insurance plan that offers the dual benefit of investment to fulfil the policyholder’s long-term goals, and a life cover` to financially protect the family in the case of an unfortunate event. The premium paid towards a ULIP is divided into two parts — one part of it is contributed to the life cover and the remaining is invested in the fund of the policyholder’s choice. They can choose to invest in equity, debt or a combination of both funds as per their risk appetite and goals.
As the insurance industry has matured and there is greater awareness about the insurance products. The regulatory change involving the use-and-file procedure would work towards empowering the insurance companies by improving the ease of doing business. All the health insurance products, almost all general insurance products under fire, motor, marine and engineering and life insurance products (except individual savings, pensions and annuity) can be filed under this procedure, according to a Grant Thornton report.
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