Insurance regulator IRDA has ramped up new product clearances, signalling its commitment to improve life insurance penetration in the country.

New insurance product approvals grew 46 per cent in 2015-16 to 227 from 155 in previous fiscal, official data showed.

Although IRDA has been driving change in the insurance sector, the level of life insurance penetration has been low. The country’s life insurance penetration had dipped to 2.6 per cent in 2014-15 from 2.8 per cent in 2013-14.

IRDA has been working on several fronts to improve protection levels in the country.

First, the regulator made it mandatory for life insurance players to offer life cover, five times the annual premium and subsequently raised it to ten times. This was done so that consumers had access to products that assured a higher quantum of protection.

Second, IRDA ensured that new insurance products filed for approval were quickly approved.

Protection space

Commenting on the product approvals, Sandeep Batra, Executive Director, ICICI Prudential Life Insurance, said this is a reflection of insurers getting more simple and sharper products in the protection space.

A number of product approvals by the IRDA in recent times have been in the protection space, he said.

With the large protection gap and IRDA supporting higher protection for the Indian population there is still ample scope for growth, Batra told BusinessLine .

A major area of concern for the insurance regulator has been the ‘mortality protection gap'.

Mortality protection gap is the difference between the actual insurance cover required as against the current cover. The regulator has been making efforts to increase awareness on the importance of protection.

Falling premium rates

Another life insurance industry honcho pointed out that IRDA was willing to walk the extra mile in improving levels of protection. There is need to remove misconception that IRDA is not keen to give product approvals, the top official said.

An important factor that is aiding the improvement in protection is the fall in ‘premium rates’ in recent decade. “Product support has been there from IRDA. The regulator has been supporting the industry in terms of innovation it wants to do,” said another private life insurance player.

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