After allowing health and general insurance companies to launch products without its prior approval, the Insurance Regulatory Authority of India (IRDAI) has further relaxed the norms by extending the ‘use and file’ procedure to most life insurance products.

"In order to facilitate the life insurance industry to respond faster to the emerging market needs, in terms of designing and pricing of insurance products and to promote ease of doing business, it is decided to expand the scope of use and file procedure for life insurance products," says an IRDAI circular, which will come into force with immediate effect.

On a circular issued on June 1, 2022, IRDAI had relaxed norms for all the health insurance products and almost all the general insurance products. The new relaxation means companies will now be able to launch any new insurance products without prior approval from the regulator; they can just file the updates with IRDAI later.

Earlier, IRDAI had imposed curbs on the launching of any insurance product without its prior approval when the industry was in its nascent stage. As per the regulator, the industry has attained maturity now, and necessary relaxations can be allowed.

"This move will enable life insurers to launch most of the products (except individual savings, individual pensions and annuity) in a timely manner according to the dynamic needs of the market. This will result in improving ease of doing business for the insurers and also lead to expansion of the choices available to the policyholders," says the insurance regulator.

The regulator wants life insurers to have board-approved product management and pricing policy, or BAPMPP. Their board will constitute a product management committee (PMC). The PMC may comprise an appointed actuary, chief risk officer, chief marketing or distribution officer, chief technology officer and chief compliance officer of the insurer as members and also an option to include other members of its senior management as invitees. "The PMC will review and approve the products or riders in line with BAPMPP," says IRDAI.

The idea behind the move is to encourage the insurance industry to respond faster to the emerging market needs, in terms of designing and pricing insurance products. This will also provide more choices to the policyholders, increasing the insurance penetration in India.

The use & file rule will be applicable to individual non-linked pure-term products and those with the return of premium; individual non-linked health products; individual unit-linked products offered with the existing approved funds only; and group non-linked term insurance products (including one-year renewable, single premium).

The rule will also apply to the group non-linked savings insurance products like group non-linked superannuation products; group non-linked gratuity products; group leave encashment products; and group post-retirement medical product.

Group non-linked credit life insurance and health products will also be part of this rule. Companies will be able to offer products under term rider, accidental death benefit rider, accidental total or partial permanent disablement rider; waiver of Premium rider; critical Illness rider; and terminal illness rider, with IRDAI's prior nod.

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