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Give us time to digest what you’re dishing out, the life insurance industry is trying to persuade the Insurance Regulatory and Development Authority (Irda).
For instance, the regulator is likely to come out with new norms on both pension and traditional plans over the next two months, say companies. The industry isn’t in favour of both these important guidelines coming back-to-back. Insurers, through the Life Insurance Council, are in talks with Irda to space these regulatory changes, with a gap of preferably a year between each of the important guidelines being awaited. They have also requested the regulator to not fix all issues together, but to take one or two key ones and address these before going on to the next ones.
Insurers also complain the regulator does not take all their views into account. “The new norms for pension products were earlier going to be announced in May, for which the industry’s views were hardly considered by Irda,” says a life insurer.
A senior Irda official says it is not possible to take each and every view of the industry into account. The industry, then, wants the regulator to engage in five-six rounds of discussion before coming to a conclusion on products and services.
Rajesh Sud, managing director and chief executive officer of Max New York Life Insurance, says, “The issuance of guidelines needs to be well spaced. There has to be a decent gap, depending on the nature of the guideline. There has been a lot of regulatory action and many more are expected in the coming months. The regulator needs to give us a longer tenure, discuss with insurers before coming out with changes, so that the regulation has a broader consensus. If followed, this can give us time to prepare ourselves well for each change.”
In situations like these, it becomes difficult for the industry, it says, to cope with the regulator’s speed and make appropriate changes in products and services.
Till now, the regulator has given very little time (typically, one to three months) to the industry to understand and implement the guidelines. In foreign countries, insurers are mostly given a year, it complains.
“We need to pick out two or three big issues and address these, one by one. This will give both the industry and customers enough time to cope,” says Sandeep Ghosh, CEO of Bharti AXA Life Insurance.
Insurers feel the regulator is in a haste because Irda chairman J Hari Narayan is going to retire in 2013.
Therefore, they believe, he wants to finish all that he had planned to do in his tenure. The industry has had heavy losses due to poor sales of unit-linked plans since the time new guidelines were announced in September of 2010.
And, Irda has since also been trying to revamp one rule after another. As a result, the industry has not been able to get the kind of sales it saw before September 2010.
Apart from the ones mentioned above, norms are awaited on issues like bancassurance, reinsurance, mergers and acquisition, super agents and financial need analysis.