IRDA slow in clearing insurance products

Products not cleared due to lack of product understanding,absence of Member-Actuary and poor staff strength

The huge delays by the insurance regulator in clearing products of health,life and general insurers has prompted the finance ministry to suggest a principle-based regulatory approach. Under such an approach,the regulator can set broad guidelines and companies can go ahead and launch products without seeking its prior approval.

According to an internal note of the Insurance Regulatory and Development Authority (Irda),the regulator took an average 344 days to process a health insurance product,135 days for a general insurance product and 105 days for a life insurance product. This is in sharp contrast to the scenario prior to September 2007 when insurers could go ahead product launches if the the regulator did not revert within 30 days of receipt of application.

The huge increase in the turnaround time to clear products has left the sector quite disenchanted with Irda. The industry has also raised the issue with the finance ministry. After September 2007,the turnaround time started rising,but has now reached high levels.

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Irda has said that the rise in turnaround time was a result of the complexity of products filed by insurers. Market participants,however,argue human resource issues such as staff shortage at Irda,absence of a Member-Actuary and lack of product understanding as the cause for delays.

We are looking at the turnaround times internally. The time taken to clear products depends on the clarity with which details about the product are filed. If the products are simple,then they get cleared. But in the case of complicated products,the issue is not just about the robustness of the product but also its communication, J Hari Narayan,Chairman,Irda told The Indian Express.

The insurers have contrary views. We had a product pending with them for two years and after two years they sent it back saying that a lot of time has elapsed and you may want to review the assumptions, said the head of a leading insurance company. Insurers say that this is leading to a situation where they cant plan a product launch and by the time they receive the approvals the product may lose its attractiveness because of changing market environment.

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