Life insurers seek more time to comply with new norms

13-Jul-2010

Life insurance companies have sought more time to comply with the new guidelines on unit-linked insurance plans (Ulips), citing lack of time. They hope the extra time will allow them to convince the regulator to drop some of the new rules. The insurance regulator, Insurance Regulatory and Development Authority (Irda), has asked the life insurers to follow the new guidelines from September 1, which among other things require Ulips-type pension plans to bundle health or life insurance and offer some guarantee on returns.

"The executive committee of life insurance council has sought at least three month extension in implementing the proposal," said the CEO of a life insurance company who attended the meeting on Monday. The council has also requested Irda to allow insurance companies to offer pension plans without guaranteed returns or with the attached health or life cover.

"As of now we've both the variants of pension products. Bundling a health or life cover will be restricting the choice of customers," said the head of a private sector life insurer, adding that a large section of people may be left out, since mandatory life or health cover would translate into hefty premiums. "This will be financial exclusion." Irda had earlier tightened the norms for unit-linked insurance and pension plans. The new guidelines make it mandatory for insurance companies to bundle a life or health cover with pension plans. The regulator has also asked the life insurers to provide a guaranteed 4.5% return on all pension products. "All these issues were discussed in the meeting. We definitely need more time to bring in the new changes as it requires a lot of improvement in the system," said K Sahay, CEO Star Union Daiichi Life Insurance.

Source : www.insuremagic.com