Life insurance companies may have to pull up their socks to comply with the new guidelines for traditional insurance products.
The Insurance Regulatory and Development Authority (IRDA) is not in favour of extending the deadline for withdrawing existing products that do not meet the new norms and re-filing them afresh, according to reliable sources.
According to the regulator, all existing group products have to be aligned with the new rules before June 30, while individual products have time till September-end.
The industry has been requesting for more time as it has to recall about 400 products and re-introduce them in line with new design norms with key changes in aspects such as guaranteed surrender value.
“Yes. There have been requests but the authority may not extend the first deadline of June 30 which is immediate,’’ a senior IRDA functionary told Business Line .
Though not pleased, insurers are busy working to meet the deadline. “At Max Life, we quickly adopted ourselves to the ULIP norms after 2010. We hope to do the same again,’’ Rajesh Sud, Chief Executive Officer and Managing Director of Max Life Insurance, said.
“But definitely, there is a need for more time as this is happening at a very quick pace,’’ he added.
Rajiv Kumar, Chief and Appointed Actuary, Bharti AXA Life Insurance Company, said his company was well prepared. “Actually, we have launched our first product which has been designed in tune with the new rules,’’ he said.
Many companies have also started training sessions for their agents on the new products being designed.
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Big players, however, are likely to face the heat as they have more number of products.
“For big players, like the Life Insurance Corporation, there may be a product vacuum as product rollout would be tough,’’ Rajiv Kumar said.
The industry has its own fears that the regulator may take time to approve new products.
“Going by the track record and skillsets available with the IRDA at present, I fear that it may take some time for product approvals. This would impact the first-year premium growth adversely,’’ said a top functionary of a private insurer.
“I hope that as an industry person, the present Chairman T.S. Vijayan is aware of these issues,’’ he added.
It remains to be seen how the new norms impact the industry as it is just recovering from the decrease in business it suffered after regulatory changes in unit-linked insurance plans in 2010.