|Chennai||Rs. 24840.00 (-0.36%)|
|Mumbai||Rs. 25460.00 (-0.16%)|
|Delhi||Rs. 25450.00 (2.21%)|
|Kolkata||Rs. 25000.00 (0%)|
|Kerala||Rs. 24700.00 (0%)|
|Bangalore||Rs. 25050.00 (1.42%)|
|Hyderabad||Rs. 24930.00 (1.63%)|
Concerned over the rampant mis-selling of guaranteed products — especially net asset value (NAV) ones — of life insurance companies, the Insurance Regulatory Development Authority (Irda) is pushing for greater disclosure on these products.
“The data must be provided separately for NAV-guaranteed and other products (both for existing and withdrawn), which are in your books as of December 31, 2010,” the regulator said in a letter written to all life insurers.
The specific data the regulator has asked for include the name of the products, fund size, premium and the number of polices for all guaranteed linked and non-linked products, among others.
“Since these products are complex in nature, we are seeking more disclosures from the insurance companies. We believe there should be more disclosures to the policy holders as well,” said a senior Irda official.
“We are working on devising new disclosure norms for such products,” he added.
Industry sources said the regulator might come up with additional disclosure norms to check mis-selling of products by agents. “Irda is looking at how are these funds are sold,” a life insurance official said.
These policies guarantee payouts on the basis of the highest NAV over the first seven years. However, for regular unit-linked insurance products (Ulips), NAV at the time of maturity determines the actual payout.
NAV is the ratio between the prevailing market value of a fund’s net assets and the number of outstanding shares.
To offer such guarantees, Irda mandates insurers to make an extra provision, over and above the prescribed solvency requirement, by way of extra reserves. Most firms set aside 0.5-1 per cent of investments as reserves.
Unlike other products, where it has to be approved by the actuarial and life departments, guaranteed products have to get additional approval from the finance department.
Life Insurance Corporation (LIC) of India collected around Rs 15,000 crore from Wealth Plus, its guaranteed NAV product. Samridhi Plus, another guaranteed product, collected Rs 300 core within the first 20 days of its launch.