Insurance regulator IRDAI has approved eight principle-based consolidated regulations at its 125th authority meeting following a comprehensive review of the regulatory framework of the insurance sector.
“It marks a significant milestone in regulatory governance which has replaced 34 regulations with 6 regulations and introduced 2 new regulations enhancing clarity and coherence in the regulatory landscape,” IRDAI said.
IRDAI has notified the Bima Sugam — Insurance Electronic Marketplace regulations to establish a digital public infrastructure as a one-stop solution for consumers, insurers and intermediaries. The regulations specify the formation of a not-for-profit company that will be tasked with the operation and maintenance of the electronic marketplace, which could become operational this calendar year.
The insurance products regulations have merged six existing regulations into a unified framework. “These regulations promote good governance in product design and pricing, including strengthening of principles governing guaranteed surrender value and special surrender value along with disclosures thereof,” IRDAI said.
The draft product regulations had raised concern for the industry which estimated impact on margins following the regulator prescribing creation of premium thresholds for each products for guaranteed surrender value. The new regulations, however, have proposed slab-based guaranteed surrender value on the basis of period of policy holding.
The rural, social sector and motor third party obligations regulations consolidate two existing regulations pertaining to minimum business obligations in rural, social sector and motor third party business for insurers.
The registration, capital structure, transfer of shares and amalgamation of insurers regulations streamline seven existing regulations into one. “These regulations seek to enhance the ease of doing business within the insurance industry, facilitating smoother operations and promoting overall sectoral growth,” IRDAI said.
The other regulations pertain to registration and operation of foreign reinsurers, actuarial, finance and investment functions of insurers, corporate governance and protection of policyholders.IRDAI has also denotified certain tariffs relating to fire insurance, engineering insurance, marine, and workmen’s compensation insurance among others.
“The notification of Bima Sugam will accelerate the retail platform which was long overdue. This will help the customer with better choices. Although customers will definitely need an advisor to select the right product,” said Sumit Bohra, president of Insurance Brokers Association of India.
“The de-notification of tariff has been a long standing demand of insurance brokers. This will provide greater choice and freedom to the consumers in terms of selection of risks to be insured. The move will force insurers to innovate and penetrate the market with newer products,” he added.