The Insurance Regulatory and Development Authority (Irda) today asked insurance companies to refrain from charging policyholders differential premium without prior approval of the watchdog. In the papers submitted to Irda before launching any product, insurers mention a range within which the premium rates would vary depending on unfavourable risk factors.
It should be ensured that no premium quotation is given which is outside the range filed with Irda and a rate which the underwriter and Appointed Actuary did not approve,” the insurance regulator said in a circular issued to all general insurance companies.
The regulator asked insurers to market their products in accordance with the terms and conditions as approved by the watchdog.
However, Irda has noticed that some insurers offer premium rates outside the range filed with Irda, offer discount in premiums and offer enhanced benefits on the product without charging any premiums.
“This is unhealthy practice, which besides attracting regulatory penal action, will impact the financials of the insurer, ultimately affecting the interest of the policyholders and shareholders as well. Such practices should be stopped forthwith,” the circular said.