Life insurers told to show transparency

The Insurance Regulatory and Development Authority (Irda) chairman, C S Rao, today urged life insurance companies for greater transparency in products that they sell to individuals.

Life insurance companies must come out with products which are comparable on broad parameters, Rao said after inaugurating the office of Life Insurance Council, the industry body of life insurers.

"The various ingredients of an insurance policy should be brought out so that an individual can compare and decide," the insurance regulator said.

Irda wants insurance companies to launch innovative products but with a very high level of transparency so that policyholders are informed.

Rao said the life insurance market has seen proliferation of products causing confusion among individuals as to which product would suit them.

An insurance agent sells a life product that he has and not necessarily one that suits a prospective policyholder. Irda member T K Banerjee, said the regulator is very concerned at the unit linked insurance policies being marketed by insurance companies.

The regulator will soon issue regulations to address the concerns, which include lack of understanding of the product among the policyholders and that the products as structured now are more in the nature of investment avenues than providing life cover.

Rao also said the practice of insurance agents providing rebates to policyholders by passing on certain portion of their commission must be stopped.