IRDA firming up guidelines for product design template

Insurance regulator IRDA is in advanced stages of forming guidelines for a product design template that will enable speedier clearances, a top official said. Insurance Regulatory and Development Authority (IRDA) Chairman Hari Narayan J said the regulator was aware that there are complaints from insurance companies over the time taken for getting product clearances from it.

Also Read: Life insurance penetration in India higher than global avg

"We are working with the industry to figure out a design template, guidelines about what we wish to see in products and what we wish not to see in products. "These guidelines are in advanced stage of evolution and hopefully they will become a regulation shortly," Hari Narayan told reporters. "Once we have that in place, as long as products are filed in conformity of those guidelines, then it is simple on both sides to go through and clear it," he said when asked about the complaints from insurers on the delay in clearing products.

Hari Narayan said it takes well over a year for products to be cleared in certain jurisdictions. He was speaking on the sidelines of the Graduation ceremony of 'Executive programme in Insurance and Risk Management' course offered by the Indian Institute of Risk Management. Replying to a separate query on LIC, the insurance watchdog said the Insurance Act applies to all insurance entities in India including the LIC.

The Finance Ministry recently permitted state-owned Life Insurance Corporation (LIC) to invest up to 30 per cent in a company as against the earlier ceiling of 10 per cent set by the IRDA. "Our view has been that it is not with the conformity of the Act, but I understand that the Ministry of Law has clarified that the view of IRDA is not correct," he said. "Government is not overruling. Government has their own set of regulation. They believe that it should apply to LIC. "In the opinion of the Ministry of Law, the Government has the power to frame the investment regulations of LIC," he added.

On whether other insurance companies will also be allowed to invest beyond the prescribed ceiling, Hari Narayan said the insurance industry has to be regulated on prudential principles which will not be sacrificed. The IRDA chief said health insurance regulations are more or less ready and are expected to be in place in a month or two.

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