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Life insurance companies are complaining that form-filling by new customers will become more laborious if the proposed guidelines on need-based sale are implemented.
There is need for simplifying these norms, they say.
The Insurance Regulatory and Development Authority (IRDA) had released the draft guidelines on this subject 10 days back.
These norms have to be followed by agents of life insurance companies.
In a drive to avoid mis-selling of policies and make it more scientific, the IRDA proposed to make it mandatory for insurers to have in place a suitability index (or a prospect product matrix) as a formula from April 1.
This involves eliciting a wide range of information from the policyholders, such as annual income of entire family members and sources of funding.
Insures, however, have reservations about the implementation of some of the norms and are conveying this to the regulator.
“The need-analysis is fairly detailed and good. However, the challenge is to make the customer involved fill-up all the required information on a proposal form in the correct spirit,” Mr Suresh Agarwal, Executive Vice-President, Kotak Life Insurance, told Business Line .
Not many prospective policy buyers are willing to share correct information on financial aspects, he said.
At the proposal level, this level of rigour in filling-up the form may lead to de-motivation of agents, feel industry experts.
According to Mr G. Nageshwara Rao, Managing Director, IDBI Federal Life Insurance , the proposed norms might make the sales process prolonged.
“The insurance industry sells over five crore policies every year. On an average, an agent makes three visits before convincing a person to buy life insurance. The proposed product matrix may delay this even more,” he said.
A more simplified and less intrusive approach will be useful, Mr Rao added.
According to Mr Agarwal, the bigger ‘challenge' would be training or hand-holding the agents/advisors in convincing the customers to share information.
However, Mr J. Hari Narayan, Chairman, IRDA, prefers to stick to his guns. “What we want to do is give legality to data being collected from the customers. As some of it is expected to be obtained even now, I don't see any difficulty for industry with the new guidelines,” he said.
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