Insurers cautious on venturing into use-and-file regime

While the Insurance Regulatory and Development Authority (Irda) has said it is open to approval of products under a use-and-file regime, insurers say there haven’t been many takers, as there is uncertainty over the rules for this category.

Currently, Irda follows the file-and-use route, under which all products have to be filed with the regulator before being launched in the market. Use-and-file would mean a company could launch a product, if it adheres to certain standard guidelines and has a standard nomenclature. Only a declaration would have to be presented to Irda.

Insurers say they aren’t enthusiastic as this would curb innovation in product design. “While use-and-file would mean quick approvals, there would be no scope for introducing varied products, since we have to follow standard norms,” said the senior vice-president of a private life insurance company.

Irda chairman T S Vijayan had earlier said they’d asked companies to suggest types of products and their wording. Once this is standardised, the use-and-file method can be used for approvals, ensuring faster introduction of products.

On an average, each product takes 15-20 days to be approved before it can be sold in the market. "Product approvals are a tedious process. If a use-and-file method is used, more products can hit the market within a shorter period. However, we are not sure if several products, even if they are simple, would be allowed to use this mode," said the chief actuary of a large life insurance company.

Life insurers also said the terms and conditions of approval under this regime were not clear. The chief executive of a mid-size life insurance company said though only simple endowment and term products may be sold under use-and-file, the policy wordage and features were still being debated.

Last year, under J Hari Narayan’s regime, Irda had suggested use-and-file method of product approvals, so that simpler products could be introduced in the market in a quicker manner.