Nothing in life remains constant. May it be your day-to-day life, the weather, environment or for the matter of fact the Government in power. Everything changes at its own time. Change is inevitable and the only way to move ahead successfully in life is to accept change willingly. A sudden change in one’s routine may make him or her uncomfortable for a while but slowly and steadily the new way becomes the routine and things go smoothly once again.
Similarly, when the Insurance Regulatory and Development Authority (IRDA) directed all the life insurance firms to re-file all existing products according to its new product design guidelines, the insurers were left uncomfortable. Moreover, recently the regulator has directed insurers to withdraw by October 1, 2012 all the existing products based on the earlier guidelines. Thus, going by these guidelines it is feared that the life insurance industry may be left with only a handful of products from the month of October 2012.
Also, the fact that the IRDA is yet to come out with the final guidelines on product designs, has added to the agony of the insurers and leading to fears that the industry would not be able to offer any products - whether linked or non-linked - to customers from October 2012. Besides, the IRDA is not exactly known for providing fast clearance for products either.
According to the insurers, it generally takes about two weeks to file a product. Considering an insurer typically has more than 25 insurance products in its portfolio, it is virtually impossible to re-file all the products within three months. Also, given that the IRDA takes at least 60-90 days to approve a product, there may be at best one or two products an insurer would be able to offer from October 2012. This, they (insurers) believe, would adversely impact the growth of new business premium in the second half of the financial year 2012-13.
What should existing insurance policyholders do?
Existing policyholders in any of the insurance products need not worry. The directive issued by the IRDA will be applicable to only new insurance policy being bought by policyholder. Thus, if you have already bought an insurance policy and are paying your premiums on time, there is nothing to worry about. But in case if you are a first time buyer, then you may have a limited choice in buying an insurance product starting from the month of October 2012.
In our view any change brought about by IRDA which ultimately results in the well-being of the policyholders is welcome. However, IRDA should also fast track its approval process for the new or re-filed products, thereby making things conducive for the insurers as well. Care should be taken by the IRDA while finalising the new product design, as this shall be the blueprint for all the insurance policies going forward. Any loopholes may give rise to mis-selling of insurance products by self-centred agents.
Do you think the IRDA should provide faster clearance for insurance products in the betterment of the insurance industry? Let us know your comments or post them on our Facebook page / Twitter page.