On 22-3-2024, the Insurance Regulatory & Development Authority of India (‘IRDAI’) notified the Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024. The provisions will come into force on 1-4-2024.
Key Points:
- Applicability: insurers who have certificate of registration for business of life insurance/ general insurance/ health insurance in India.
- The regulations will be reviewed once in 3 years from the date of its publication.
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Objectives:
- To facilitate insurers to respond faster to emerging market needs/ design innovative products/ to promote ease of doing business and to improve insurance penetration.
- To protect the interest of policyholders by enabling insurers to adopt good governance while designing and pricing the products.
- To ensure sound and responsive management practices for effective oversight and adequate due diligence.
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Principles to be followed by the insurer in Product design & development cycle of insurance products:
- evolving risk coverage needs of customer are taken into account while developing new products and revising existing products;
- product covers an insurable risk with an underlying risk transfer;
- products offered are simple to understand and not complex;
- transparency and clarity in wordings, terms, coverage, exclusions and conditions;
- policyholder’s interests are protected;
- basic principles of insurance are adhered to;
- all risks relevant to the products are appropriately considered in the pricing;
- premium rates are fair and not excessive, inadequate, unfairly discriminatory and provide value for money;
- products are viable and self-sustainable;
- market conduct practices are appropriate and fair;
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Product management and governance:
- Every insurer should have Board approved policies covering all areas of product design, underwriting, advertisements and overall management of the insurance products.
- Board will constitute a Product Management Committee (‘PMC’) which will be responsible for implementation of Board approved policies and ensure:
- adherence to principles of design and pricing of insurance products;
- appropriateness of the product design for the target market;
- regulatory compliance and recommending products for filing under File and use procedure;
- products falling under Use and file category are approved;
- modification or withdrawal of the product, if required;
- overall management of the insurance products.
- Review of insurance products: Products offered for sale will be reviewed by Appointed Actuary once a year, taking into account:
- reasonable expectation of all stakeholders (including policyholders);
- financial viability of the products;
- emerging risks and experience under the products.
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The following Regulations will stand repealed from 1-4-2024:
- IRDAI (Micro Insurance) Regulations, 2015
- IRDAI (Minimum Limits for Annuities and other benefits) Regulations, 2015;
- IRDAI (Acquisition of Surrender and Paid up values) Regulations, 2015;
- IRDAI (Health Insurance) Regulations, 2016;
- IRDAI (Unit Linked Insurance Products) Regulations, 2019;
- IRDAI (Non-Linked Insurance Products) Regulations, 2019.
- Schedule I relates to Specific provisions applicable to life insurance products.
- Schedule II relates to Specific provisions applicable to general insurance products.
- Schedule III relates to Specific provisions applicable to health insurance products.
