The file-and-use mandate for 18 product categories identified by Insurance Regulatory and Development Authority (Irda) would take a longer time to be implemented, than expected. The regulator will set up four committees to look into the product categories, and insurers expect it to take another year to be passed.
Product standardisation had been considered for the file-and-use mandate, as product approvals in the industry was taking time. This lead to companies not being able to offer products till it was approved. So, the regulator had proposed standardising some products that can be offered in 15 days of being filed with the regulator. In case of non-linked life and pension products, both participating (that declare returns in the form of annual bonuses) and non-participating (that promise assured returns) were identified. Under the linked category, unit-linked life and pension products and variable insurance products (life and pension products) where the benefits are linked to any external approved index have been identified for standardisation.
Insurers are of the view this would lead to lack of innovation, with companies having similar kind of products for file and use. “The whole purpose of file and use has been negated with a standard guideline for having a product under file and use, since the flexibility factor has been taken away,” said the head of a private life insurance firm.