Come January 1 and the life insurance industry will see a major change in the way business is conducted. Over 400 life insurance schemes currently in the market will be withdrawn and new revised schemes will be launched by companies in the new year as directed by the Insurance Regulatory and Development Authority (Irda) in the new guidelines.
As the insurance regulator pushing for a major restructuring exercise in the life segment with focus on a customer-friendly and transparent approach, the industry which comprises of 24 players is raring to go with the revised set of schemes. Life Insurance Corporation (LIC), the leader, has decided to stop selling as many as 34 policies, including Jeevan Anand, Jeevan Madhur and Jeevan Saral, to comply with new regulatory guidelines. LIC stopped the sale of Jeevan Amrit from December 7, Jeevan Surabhi from December 14 and will end other schemes from December 21 and December 28. The remaining 28 policies will go off LIC’s shelves from December 31. LIC had withdrawn 14 policies including Convertible Term Assurance and Children Deferred Endowment Assurance in November.
“We have cleared about 400 new life products as per the new design norms, and only a few are pending,’’ Sudhin Roy Choudhury, Member (Life), Irda, said. “After September 2013, all companies have shown positive growth. The feel-good factor has come back, driven by the new product regime. There is need for out-of-the-box thinking in the industry,” he said.
Reliance Life Insurance Company chief executive Anup Rau last week said the company received most of the product approvals from Irda and will be launching these over the next three months. “We will largely focus on traditional plans and continue to provide simple and need-based solutions to customers,” Rau told reporters last week.
Irda has issued new guidelines to make policies more customer friendly. The regulator notified changes made to the guidelines on design of life insurance products in the gazette in February 2013. All existing group products should have been withdrawn from July 1, 2013 and all individual products from October 1, 2013. However, Irda extended the deadline to January 1 in order to enable a smooth transition to the new regime as several insurers including LIC approached the regulator with the revised schemes only in the last week of September.
The new guidelines have introduced three broad categories of products — Traditional insurance plans, variable insurance plans (VIPs) and unit-linked insurance