Implementation of use-and-file products in the life insurance sector is likely to take some more time, say industry insiders. Although the insurance regulator has allowed such products that can be sold directly for the general insurance sector, this method of getting product approval might take some more time for the life segment. Use-and-file and file-and-use are two methods employed by the Insurance Regulatory and Development Authority of India (Irdai) to approve insurance products before they can hit the market. While a use-and-file product can be sold directly in the market by giving a declaration to the regulator, in the latter's case pricing and structure of the product has to be filed with Irdai before it is sold.
Irdai Chairman T S Vijayan had said recently that use-and-file would be first implemented for simple products in the general insurance industry. This would be the first step to implement the working group report on the file-and-use (F&U) guidelines. This would mean customers would get products quicker, which could then be tweaked based on feedback. Industry officials said since pricing, terms and conditions were difficult to be standardised across categories in life insurance, it may take longer for use-and-file to be implemented for this segment. A working group report had suggested that insurers can launch products for a short period of time in a defined area with defined exposure limits on a pilot basis, after informing Irdai. If use-and-file comes into play, a product is first launched in the market and then a declaration is sent to the regulator giving out finer details of the product and its pricing. This would mean products hitting the market early and available within a faster turnaround time between market research and the product being sold for customers.