Irda may cut Ulip approval time from 30 to just 3 days

The Insurance Regulatory and Development Authority (Irda) is likely to hasten the file and use procedure for unit-linked insurance plans (Ulips).

At present, Irda takes 30 days to approve any product. Insurers expect it to come down to three days in case of the existing products. After the cap on the overall charges, 22 life insurance companies will together re-file around 150-200 unit-linked products. “As far as products are in line with the new norm, we will approve it in less than the normal time since there are more than 200 Ulips of the 22 life insurance companies,” said Irda Executive Director K Subrahmanyam.

The regulator has called for a meeting with the appointed actuaries on September 9 to assure proper implementation of the new norms. Irda has formed a committee headed the Life Insurance Council Chairman S B Mathur, chief actuaries of few insurance companies and chief executives of a few life companies. An actuary of a life insurance company said that insurers would take the issue to the regulator and it was likely to reduce the timeline of process as it did in 2006 when it came out with fresh guidelines on Ulips.

In 2006, when Irda had changed Ulips guidelines mainly imposing sum assured at five times the premium and three-year lock-in period, it approved products in 15 days. All existing unit-linked products will have to comply with the revised guidelines from January 1, 2010, and therefore, these products will have to be re-filed by December 31, 2009.

“Last time, when Irda had changed the norms, it had asked insurance companies to file Ulips and use it after certifying it with appointed actuary. It involved risks and the regulator had later asked insurers to withdraw or change those products, which did not meet new rules,” said Future Generali Chief Actuary GN Agarwal.

“Irda will look at quick approvals as there are so many products. The numbers of companies and Ulips have doubled from 2006 when the guidelines were laid down. The regulator will speed up the process. Since it approved products in 10-15 days in 2006, it may start clearing the existing products in three days,” said SBI Life Chief Actuary Sanjeev Pujari.

According to the new norms, the difference between the net and the gross yield is capped at 3 per cent and the fund management charges are capped at 1.35 per cent. While mortality and morbidity is kept out of the ambit of the overall charge, Irda said there can be no surrender charge after fourth year.