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Insurance Regulatory and Development Authority (Irda) today revised the file and use norms in the group and immediate annuity segment for life insurance companies. The regulator said that the discounts and loadings offered based on various rating factors specific to the group should not be more than 30% of the premium.
If it exceeds, such discounts or loadings have to filed and approved under the file and use procedure.The regulator said that in group products, it has been observed that the premiums approved under file and use procedure and the actual premium quoted to various groups appear different.
With reference to all immediate annuity products (individual and group), life insurance companies have to follow the existing procedure of obtaining the approval whenever new products are introduced in the market. However, subsequent to introduction of these products, life insurance companies have the flexibility to vary annuity rates in the range of -10% to +10% of the approved annuity rates without taking the prior approval of the Authority.
This is, provided the change is due to changing interest rates scenarios to enable the life insurance companies to change annuity rates quickly so as to have an efficient asset and liability management.
Irda has said that in all such circumstances, the insurer shall file with them such revised rates along with the revised assumptions within 7 days from the date of revision. However, where the annuity rates have to change by more than 10%, the existing file and use procedure for needs to be followed.
The circular comes into force with effect from October 1, 2014.
