India:Wide sweeping changes proposed for life insurers

| 22 Dec 2017

A panel appointed by the regulator IRDAI to look into regulations in life insurance has recommended that insurers be allowed to offer loans against insurance policies. The committee suggests too that surrender values, on which the loan amounts are to be based, be increased.

The report, which will be reviewed by IRDAI, proposes several other wide sweeping changes to insurance.

The committee suggested that IRDAI should allow self-regulation and more internal governance by insurers.

The committee also said that the regulator must lower the mandatory proportion of investments in government securities and allow a higher investment quantum in categories like equities and property, reported Moneycontrol.

Level playing field

To ensure that the pension business of insurance companies is on par with other products like National Pension Scheme and Employee Provident Fund, the committee has said that partial withdrawals be allowed. It also said that providing a capital guarantee should not be made mandatory and can be one of the options available to customers.

The committee strongly recommends a level playing field in health insurance business for life insurers on par with general insurers and standalone health insurance, particularly, in allowing them to sell indemnity based products, provide value-added services like wellness programmes, offer all-coverage terms and bring parity in commission levels.

The committee feels that life insurers, like other service/product providers should optimise avenues to increase insurance penetration. This would mean that customers can buy not only health and general insurance products from life insurers, but also be able to enjoy other services like booking hotel/flight tickets and pay utility bills. There could also be product specialists selling only cancer products or term insurance products. Life insurers could also offer multiple products including offering travel insurance, the panel recommends.

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