The Hindu Business Line : IRDA to standardise format for products

The regulator believes that this would enable it to clear insurance products faster and increase transparency with respect to the benefits for the insurance policy holder.

A senior IRDA consultant said that insurance companies should follow a standardised format while designing the product literature, policy document and proposal form of the policyholder.

Too complex

"Currently, the new products that are being filed with the IRDA are extremely complex and there is ambiguity with respect to the features and the benefits to the policy holder," said the official.

The file and use system currently followed by the IRDA requires new products to be certified by the CEO and the appointed actuary of the insurance company.

It is then filed for approval by the regulator. Insurance companies have, however, been complaining that IRDA's shortage of actuaries has caused a long waiting period in terms of the clearance of products.

The IRDA plans to discuss the issue of standardisation at the next Life Insurance Council meeting.

Annualised figures

The official said that IRDA had also asked companies to show only annualised figures of the returns on the policy instead of projecting short-term gains.

The problem is particularly acute in the case of unit-linked policies.

"We hope to increase the transparency of the insurance product for the policy holder.

If the product is very complicated ,then there might be a `disconnect' between the appointed actuary's idea of the policy and that of the marketing team or intermediaries," said the official.

Pressure from team

There is also pressure from the marketing team and the agency force on the appointed actuary to design new products, he added.

In terms of clearance of products, the official hoped that the regulator would soon be able to clear products in 30 days with this simplified format.