The Insurance Regulatory and Development Authority of India (IRDAI) has allowed general insurance companies to introduce products without seeking prior approval from the regulator, in what is the first major reform by the new IRDA chairman.
The IRDAI said it has extended the ‘use and file’ procedure for all the Health Insurance products and almost all the general insurance products in line with the reforms agenda taken up towards having a fully insured India. The new norms are effective immediately.
Speaking exlcusively to ET IRDAI chairman Debasish Panda said the change will enhance customer choice, lead to innovation and better pricing for customers. "Companies will no longer need to first take an approval from IRDAI before launching a product. They can introduce it directly to the market and then file it with us for monitoring or checking trends," Panda said.
The new rule will cover all health plans and also fire, engineering and motor plans offered by general insurance companies. Panda said only a small minority of plans below Rs 5 crore sum insured are exempt from the new reform because of some operational purposes. "90% to 95% of general insurance plans now need not approved by the IRDAI before being introduced in the market.
This is a major reform which will enhance customer choice, increase innovation, make pricing better and increase competition," Panda said. IRDAI said the reforms will improve ease of doing business in the insurance sector as products could be launched without any prior approval. "It is envisaged that these initiatives will enable the insurance industry in launching suitable products in a timely manner.
The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India," IRDAI. Doing away with seeking prior permissions has been a long standing demand for the industry.
The revision in norms will provide greater flexibility and quicken the process of introducing new products, industry leaders said. "This will provide the market the opportunity to quickly provide solutions in the form of new products. It gives us flexibility to introduce new products without waiting for the IRDAI approval which sometimes used to take months," said Rakesh Jain, CEO, Reliance General Insurance.
IRDAI said that the new norms will enable the insurance industry in launching suitable products in a timely manner. "The insurance industry is expected to use this opportunity for introduction of customized and innovative products, expansion of the choices available to the policyholders in order to address the dynamic needs of the market, which will further help in enhancing the insurance penetration in India," the regulator said.