New insurance covers don’t need Irdai’s nod

MUMBAI: In abid to improve the ease of doing business, the Insurance Regulatory and Development Authority of India (Irdai) has introduced a ‘use and file’ procedure — which allows insurers to launch a product first and then file its details with the regulator — for all health insurance covers and almost all general insurance products. Until now, the regulatory regime required prior approval for launching products.

“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 customised and innovative products,” Irdai said in a statement.

A ‘use and file’ system has been a long-standing demand of the industry. It was originally envisaged that insurers would be allowed to file and use their products. However, industry officials have been complaining about long delays in approval of products. New Irdai chairman Debashish Panda had promised to bring in a fresh wave of reforms in the sector soon after taking charge in March this year.

Speaking to TOI, M N Sarma, secretary general of the General Insurance Council — an association of non-life companies, said that the council has for long represented for a ‘use and file’ regime. “The industry has matured and no insurer will put their reputation at risk by introducing a product that is not beneficial to the customer. If the regulator finds that a product is not in order, they can ask for it to be withdrawn,” he said.

While there is no tariff dictating the pricing of products, the regulator has been looking at prices while granting approval. It also examines them to see that they are not misleading and the benefits are in line with what is indicated.

According to Sarma, insurers may have to obtain a product code which is not a major hassle. The main delay used to be in the clearance of the product. “The ‘use and file’ is a system that is used by non-life regulators globally. This could lead to introduction of more products in the retail segment” said Oriental Insurance CMD Anjan Dey. At the time of liberalisation of the insurance sector two decades ago, Irdai had envisaged a ‘file and use’ system under which a product had be submitted to the regulator and, if there was no objection within a period of 30 days, they would be free to start sel- ling.

However, insurers said that invariably there would be queries and the launch of a product would take months. In the past, the regulator has had issues with the industry over several retail products in the non-life segment. One of the earliest products that had to be withdrawn following objections was a personal accident cover which provided high benefit in case of an accident in a public transport vehicle on a holiday. It also objected to non-life companies selling a product providing death benefit.