IRDAI Broadens Scope Of 'Use and File' For Life Insurance Products
The Insurance Regulatory and Development Authority of India (IRDAI) has recently expanded the scope of the existing 'use and file' procedure, allowing insurance companies to introduce Unit Linked Insurance Plans (ULIPs) and combi plans (combination of life and health insurance plans) without the need for prior approval from the regulator.
These changes have been implemented to facilitate the insurance industry in promoting insurance penetration.
Under the revised guidelines, insurers can launch products first and then file the details with the regulator using the 'use and file' procedure. This procedure applies to health insurance products, life insurance products, and most general insurance products.
The recent modifications include the inclusion of individual and group unit-linked life and health insurance products under para No.10.4 of Section B of Chapter I. Life insurers can now utilise and file these products under the revised procedure.
Additionally, a new para 10.10 has been introduced, allowing the introduction of "combi products" where a life insurer acts as the lead insurer. Compliance with the norms set by IRDAI is mandatory for life insurers offering combi products.
In an effort to streamline the product launch process, the regulator has eliminated the segregated fund identification number (SFIN) clearance process. This change reduces administrative obstacles for insurers, enabling smoother and faster product launches.
However, life insurance companies must still adhere to other prudential and exposure norms outlined in the IRDAI (Investment) Regulations, 2016 for each ULIP segregated fund and overall AUM of ULIPs.
Furthermore, IRDAI has allowed the addition of new unit-linked funds to existing products, expanding investment choices for customers and promoting incremental innovation in the industry. The 'use and file' process facilitates quicker product filing and market introduction, encouraging faster innovation.
It may be noted that in 2021, IRDAI extended the 'use and file' process to cover all health and general insurance products. However, non-compliance with the procedure can result in action by the authority, including directing the insurer to withdraw the product or withdrawing the 'use and file' facility for a determined period. These norms are applicable to products filed from 1 April 2021, onwards.
