Concerned about the fast pace of regulatory changes being brought into the sector, the life insurance industry has approached sector regulator IRDA to go slow in its approach, sources said.In turn, the Insurance Regulatory and Development Authority (IRDA) has assured industry players that it will go slow in bringing regulatory changes from next year, a move that will bring some respite to the players, the sources added.
Ever since the controversy over the regulation of ULIPs was sorted out by the Government through an Ordinance in July, which was later made in to an Act this year, IRDA has brought about a lot of changes in the life insurance sector.
The regulator has also made unit linked products (ULIPs) that give customers life-cover along with returns from investment in the capital markets, a long-term product so that it could be distinct from any other investment product.
Besides, ULIPs has a mandatory lock-in period of 5-years, unlike the past practice where policyholders had the option to surrender their ULIPs after three years.
IRDA also had most insurance companies reduce the first year commission of their agents. Earlier practice had some insurance companies distributing commission to agents over certain period to allow them income on a regular basis. However, IRDA’s decision to reduce insurers’ income from the premium, has made several agents look for alternative income sources.
Prohibiting life insurers from selling universal life plans like ULIPs that have greater flexibility over traditional plans, minimum assured sum for subscribers, allowing insurers to sell life policies online, besides giving customers an option to purchase life insurance policy without the help of an agent are the other changes ushered by IRDA.
Sources said the insurance industry conveyed to the regulator that rapid pace of changes in the sector was hurting their business.
In turn, IRDA has assured it that most of the big changes for the industry are already done, so 2011 will see somewhat less number of changes, they said.
Despite the new changes, the business of life insurance industry has been growing. The life insurance companies mopped up new premium of Rs 69,706 crore during April-October this year, up over 49 per cent from Rs 46,689 crore in the corresponding period last fiscal.