Was J HariNarayan of IRDA Stalling Insurance Reforms ? New Guidelines for ULIPS

March 30, 2013 · Author: · Category: insurance 

J Harinarayan was the Chairman of IRDA for quite a long time when the Insurance industry looted the Indian Public with ULIPs and other Products of mass wealth destruction. IRDA had absolutely no monitoring from the Government as it evident from thousands of complaints listed here.

At the beginning of this Month, T S Vijayan took over as the Chairman of IRDA and immediately issued Guidelines to Safeguard the interest of the consumers as listed below.

IRDA has released the final guidelines for traditional products to be implemented at the latest by 30 September 2013.

The guidelines, akin to guidelines for ULIPs, have rationalised commissions, surrender charges and term of the product. For non-single premium products, commissions are capped depending on the premium paying-term of the policy. This would discourage agents to sell policies with shorter tenure where commissions are lower in the range of 15-20%.

Attains guaranteed surrender value (GSV) after payment of second and third year premium for the policy with less than ten years of premium payment and more than ten-year premium payment, respectively, vs. lock-in period of three years earlier. The regulators have fixed the minimum guaranteed surrender value for the non participating non-linked products to 30% if surrendered between 2nd and 3rd year, 50% if surrendered between 4th and 7th year and 90% for policies surrendered during the last two years of the policy term (applies only to policies with term less than 7 years). Impact—On margins as well as persistency. Surrender charges contribute meaningful share of PBT for most insurers.

Minimum term of five years with minimum premium paying-term of five years for non-single premium policies

Non-par index-linked products will be treated similar to ULIPs, which will bring down margins. Overall, we expect margins for the
industry to settle lower at 13-14% vs. 16-18% earlier. Companies with high dependence on non-par products such as Birla Sun Life,
ICICI Pru and SBI Life will likely be the most affected while HDFC Life and Max India are relatively better placed.


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