General insurance product may soon be available over-the-counter especially in the motor and health segment. The working group that has been set up to review the file-and-use norms for the general industry will have this proposal on the top of their agenda.
“Such products will be easier to understand for the customers. While companies may continue to sell their unique products, each general insurer may be required to have a fixed number of such products,” .
It was felt by the Authority (Irda) that a review of extant guidelines has to be undertaken to ensure that products are designed, marketed, sold and serviced ensuring that a viable, simple, useful product is available to consumers and is sustainable for insurers. This working group will look into the file-and-use norms and look to have a system where the approvals are quick and timely.
Non-life insurers, similar to life insurers, are required to follow the file-and-use regime for product approval. This process is also expected to come under review, in order to enable a use-and-file type of a regime. In the use-and-file regime, an insurer doesn’t have to file a product with Irda; they have to adhere to the standardised norms and later send information on the product to the regulator’s office. In the meantime, the insurer can sell the product.
Life insurers have already been given permission to file products under use-and-file, though they have not exercised this option. While use-and-file would mean quick approvals, insurers fear that there would be no scope for introducing their distinct products, since they will have to follow standard norms.
Health and motor, which constitutes 55-60% of the total product portfolio of the general insurance industry. If a quicker approval process is initiated, more products would be available in the market, leading to better penetration of non-life sector. Non-life insurance penetration (as a percentage of GDP) in India is less than one%.
Once these norms by the working group are implemented, sector experts said that simple products will be available not just in the bank and company branches, but also in local grocery stores and phone booths, benefiting people especially in the rural areas.
