IRDA seeks to standardize description of non-life plans Choosing a non-life insurance plan will get simpler with the insurance regulator set to bring in standardized wording for all retail general insurance products. The Insurance Regulatory and Development Authority (IRDA) has set up a panel to recommend measures to revise the system of product approvals. Speaking to TOI, IRDA chairman T S Vijayan said, “The industry wants to have a system of `file and use for insurance policies. We had studied this and found that unless there was standard wording in the policy then there is no point in allowing file and use and companies will need to file their policies and obtain an approval before they start selling.“ `File and use is a system which allows insurance companies to come up with schemes which are within the framework of IRDAs principles and companies are free to start selling the product after lodging it with the regulator unless there are any adverse observations. “Take, for instance, a personal accident policy . If someone is selling a personal accident cover, the prospective customer should be very clear on the definition of accident. If that clarity is not there, there is no purpose in having a `file and use system,“ said Vijayan. He said the industry would work on five or six categories of retail insurance policies. The IRDA has already brought about standardization of wordings in health insurance to ensure that one term has the same definition across companies. Speaking on the issue of banks becoming insurance brokers, Vijayan said that a panel was still to submit its findings. “RBI has not officially conveyed its thoughts on the issue. What we said in the meetings is that we are pushing for an open architecture system with a focus on the customer. The road map is clear, it can be in any form broking, intermediary , or agency but the focus has to be on having an open architecture system with the focus on the customer,“ said Vijayan. Open architecture is an industry term used to describe a system where one bank can sell products of multiple insurance companies as against the present system which ties them down to one insurer each in the life, non-life and health segments. Vijayan said that the regulator has also received responses to its draft paper on insurance distribution firms. “We have received feedback for and against distribution companies. We will study all of those and come to a consensus,“ said Vijayan.
Posted on: Tue, 22 Apr 2014 11:16:38 +0000