The Insurance Regulatory & Development Authority (Irda) has initiated a review of the regulations to ensure that they are in sync with emerging market needs.
Irda chairman J Hari Narayan said today that the scope of the revision was “not yet known”, but indicated that selling of mutual funds by insurance companies and that of insurance policies by mutual funds were aspects under deliberation.
Hari Narayan said Irda would soon take up the issue with the Securities and Exchange Board of India (Sebi), which is the regulator for mutual funds.
The insurance regulator is also studying the issue of portability of policies and is looking at options including using PAN (permanent account number) card as a tool for portability. While the general insurance council has already discussed the issue of letting health insurance policyholders change companies, without losing out on benefits like bonus and coverage of pre-existing diseases, a final decision is awaited.
In addition, Hari Narayan said, Irda will also constitute a body to review the broking regulations. To ensure adequate supply of brokers, the regulator said, it would be desirable to allow post-graduates or diploma holders into the field and then conduct examinations over a specified time.
The review of the regulations come at a time when the government is also pushing for amendments to insurance laws, which among other things, seeks to raise the foreign investment ceiling from 26 per cent to 49 and also extend the mandatory listing period from 10 years stipulated at present.
While many of the rules, first prescribed through the Insurance Act, 1938, are still in place, a bulk of the guidelines related to solvency, minimum capital requirement, advertising and approval of products were put in place in 2000 when the sector was opened up to private players. Some of the norms like those governing investment or agent training norms have been updated, while new ones for segments like unit-linked insurance plans or Ulips have been prescribed.
At the same time, there are demands from the insurance companies to shift to a risk-based capital structure or put in place a new product approval system.
The regulator also wants to get rid of legal jargon. “The insurance companies should take the lead and provide examples of policies written in simple language,” Hari Narayan said.
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