The Insurance Development and Regulatory Authority (IRDA) is planning to allow holders of health and auto policies to switch over to other companies on the same terms in the event of the customers being dissatisfied with the services of the current service provider.
The insurance sector regulator is also working on the concept of a universal life insurance product with a lot of flexibility in terms of annual premium, tenure and cover. The proposal is akin to public provident fund (PPF), which also imparts a lot of flexibility in terms of annual deposit, though its term is fixed for 15 years.
IRDA Vision
On portability…
Policy portability will allow another insurance co to take over the policy ( health and auto insurance) on the same terms and costs charged by the previous co and at the same time allow the customer - who is not satisfied with the current service provider - to enjoy continuity of the cover.
On bancassurance …
IRDA plans to limit bancassurance services to designated states instead of allowing them to offer products across branches.
On M& As...
Soon M& A would be allowed between or among insurance cos. IRDA has almost arrived at clarity on several issues involved in M& A activities.
On Reliance wish...
IRDA has been discussing issues and modalities with Reliance General Insurance Co, which is in talks with Sundaram General Insurance for acquiring its operations.
On IPOs...
Proposal sent to Sebi and its suggestions are awaited.
On universal life cover...
IRDA is also working on the public provident fund ( PPF)- like concept to unveil a universal life insurance product with a lot of flexibility in terms of annual premium, tenure and cover. |
"We propose to allow policy portability on the similar lines of number portability in the telecom sector. Sooner or later we will move to that (system) in health (medical) insurance space, and will soon be extended to auto segment also," said J. Hari Narayan, chairman of IRDA, while inaugurating an insurance summit organised by trade body Confederation of Indian Industry (CII).
Some of the diseases or ailments are not covered by health policies in the initial years. Policy portability will allow another insurance company to take over the policy on the same terms and costs charged by the previous company and at the same time allow the customer to enjoy continuity of the cover.
"In the US, policy portability is allowed in 50 per cent of the states. We, too, have to allow this, or perhaps mandate the same if need be," Narayan added.
Before opening the industry to the private sector, customer confidence level was high. " It was shaken over the last three years (after the unit- linked insurance plans or Ulips came into vogue). To ensure a high level of customer satisfaction and for insurance companies to do what is fundamentally good, products will be tested for fairness and robustness," the IRDA chief said.
IRDA was also looking at improving the bancassurance channel, for its service levels are considered very low. " While insurance agents reach out to customers, banks expect insurance customers to come to them," Narayan added.
When one bank offers products of more than one insurance company, it leads to confusion. The regulator is planning to limit bancassurance services to designated states or geographies for each bank, instead of allowing them to offer products across their branches. Soon mergers and acquisitions (M&A) would be allowed between or among insurance firms. " IRDA has been discussing issues and modalities ' Products will be tested for fairness and robustness' Now sector in portability with Reliance General Insurance Company. We have almost arrived at clarity on several issues involved in M&A activities," Narayan said.
There were reports that Reliance General Insurance was in talks with the South Indiabased Sundaram General Insurance for acquiring its operations.
"However, it does not mean that we have cleared the merger proposal. There is a lot of process left before granting permission," the IRDA chief added.
Responding to a query on initial public offering (IPO) norms for insurance firms, Narayan said that the proposal had been sent to the capital market regulator Securities and Exchange Board of India ( Sebi) and its suggestions were awaited.
Emphasising the need for expanding the reach of insurance sector, Narayan asked the firms to improve process efficiencies to cut down the cost of servicing customers at other places.
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