Insurance Regulatory and Development Authority of India

On 22-3-2024, the Insurance Regulatory & Development Authority of India (‘IRDAI’) notified the Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024. The provisions will come into force on 1-4-2024.

Key Points:

  1. Applicability: insurers who have certificate of registration for business of life insurance/ general insurance/ health insurance in India.
  2. The regulations will be reviewed once in 3 years from the date of its publication.
  3. Objectives:

    • To facilitate insurers to respond faster to emerging market needs/ design innovative products/ to promote ease of doing business and to improve insurance penetration.
    • To protect the interest of policyholders by enabling insurers to adopt good governance while designing and pricing the products.
    • To ensure sound and responsive management practices for effective oversight and adequate due diligence.
  4. Principles to be followed by the insurer in Product design & development cycle of insurance products:

    • evolving risk coverage needs of customer are taken into account while developing new products and revising existing products;
    • product covers an insurable risk with an underlying risk transfer;
    • products offered are simple to understand and not complex;
    • transparency and clarity in wordings, terms, coverage, exclusions and conditions;
    • policyholder’s interests are protected;
    • basic principles of insurance are adhered to;
    • all risks relevant to the products are appropriately considered in the pricing;
    • premium rates are fair and not excessive, inadequate, unfairly discriminatory and provide value for money;
    • products are viable and self-sustainable;
    • market conduct practices are appropriate and fair;
  5. Product management and governance:

    • Every insurer should have Board approved policies covering all areas of product design, underwriting, advertisements and overall management of the insurance products.
    • Board will constitute a Product Management Committee (‘PMC’) which will be responsible for implementation of Board approved policies and ensure:
      • adherence to principles of design and pricing of insurance products;
      • appropriateness of the product design for the target market;
      • regulatory compliance and recommending products for filing under File and use procedure;
      • products falling under Use and file category are approved;
      • modification or withdrawal of the product, if required;
      • overall management of the insurance products.
  6. Review of insurance products: Products offered for sale will be reviewed by Appointed Actuary once a year, taking into account:
    • reasonable expectation of all stakeholders (including policyholders);
    • financial viability of the products;
    • emerging risks and experience under the products.
  7. The following Regulations will stand repealed from 1-4-2024:

    • IRDAI (Micro Insurance) Regulations, 2015
    • IRDAI (Minimum Limits for Annuities and other benefits) Regulations, 2015;
    • IRDAI (Acquisition of Surrender and Paid up values) Regulations, 2015;
    • IRDAI (Health Insurance) Regulations, 2016;
    • IRDAI (Unit Linked Insurance Products) Regulations, 2019;
    • IRDAI (Non-Linked Insurance Products) Regulations, 2019.
  8. Schedule I relates to Specific provisions applicable to life insurance products.
  9. Schedule II relates to Specific provisions applicable to general insurance products.
  10. Schedule III relates to Specific provisions applicable to health insurance products.

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