Insurers follow file-and-use guidelines, which means a product has to be filed with the regulator with details of how it will be priced, structured and featured. The regulator then decides whether to approve it. Clarifications are also sought from insurers before approval.
Read more from our special coverage on "INSURANCE"
Use-and-file allows insurers to market products without prior approval of the Irdai. The new guidelines will come into force from April 1.
“With use-and-file, more products can be launched for the commercial sector. However, we as insurers also need to set up a product management team to look into this,” said the head of products at a general insurance company.
The Irdai requires all retail products, including their modification, to be filed under file-and-use procedures. Also, products offered to commercial customers with a sum insured up to Rs 5 crore are to be filed under file-and-use procedures.
Insurers have to set up a product management committee to review all products in existence. All new products proposed are to be filed with the authority.
Deviations from underwriting policy have to be brought to the board for approval by the product management committee.
COVER FOR ALL
- Irdai has said commercial products in general insurance will be sold under use-and-file procedures
- At present insurers follow file-and-use procedures which means a product has to be first filed with the regulator and it will review the product and then take a view on whether or not to approve them
- Use-and-file allows insurers to market products without prior approval of the Irdai
- New guidelines will come into force with effect from April 1