The man who brought changes

Some of the highs and lows of J Hari Narayan's five year tenure as the insurance regulator

J Hari Narayan, the chairman of Insurance Regulatory and Development Authority (Irda) is demitting office on Wednesday. Business Standard looks at some of the highs and lows of his five year tenure as the insurance regulator:

Ulips 

Irda capped the charges and commissions on Ulips and fixed the lock-in period to five years.  

Pros: Mis-selling of Ulip products reduced drastically

Cons: Average commission in Ulips fell

 

Health insurance

Removed exit age for a health insurance policy

Pros: Flexibility of choosing hospital of choice

Cons: Premiums to go up by 15 to 20 per cent for customers, due to added services

Investment limits

Raised equity investment limit to 15% for life insurers

Pros: Enabled insurers to investment more in blue chips

Cons: Increases concentration risk

Dismantling third party pool

Irda had dismantled the commercial third-party motor pool and decided to form a 'declined' pool, effective April 1, 2012. 

Pros: It freed the pricing model and insurers would be able to price vehicles based on claims.

Cons: Price of third party insurance proposed to be hiked by upto 40%

 

Product guidelines

These proposed guidelines aim to alter surrender charges and increase commissions for agents

Pros: Products to be more simpler and transparent

Cons: First year premium for customer may rise

Open architecture for bancassurance

Irda has proposed banks can sell insurance products by playing either a corporate agent or a broker to insurance companies

Pros: Will open up bancassurance as vehicle to newer insurers

Cons: May lead to reputational risks for banks

 

Bone of contention

Ulip guidelines

Irda and Sebi locked horns over Ulips regulation after the markets regulator banned some insurers from selling Ulips. Later the government clarified that Irda would have the right to oversee Ulips.

 

LIC equity investment limit

Despite Irda’s discomfort, the government gave go ahead to LIC to invest 30% equity in a single company. Irda later issued norms increasing insurance companies’ equity exposure to 15% 

 

Use and file

Irda’s proposal of having Use and file criteria for 18 standard insurance products did not find flavor with insurer on the ground that it discouraged product innovation


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