Press Information Bureau

Government of India

Ministry of Finance

20-March-2012 18:23 IST

Insurance Companies Mandated to Take Prior Approval of IRDA of their Products Before Launching

The insurance companies are mandated to take prior approval from the Insurance Regulatory and Development Authority (IRDA) of the product before launching.

As per File and Use Guidelines, the insurance companies are required to launch products after allowing for 60 days for non-life and 30 days for life for clearance by the IRDA. Several times, however, the full details of the product, which are required in order to assess the product, are not furnished and consequently there is delay.

The time lag for this process depends on the complexity of the product, the price, features, benefits and terms and conditions of the product.

The shortest and longest time taken for product approval (from date of receipt to date of clearance) is in the ranges of 2 days to 1708 days, with an average time-lag of 109 days for the life insurance products, 103 days for the general insurance products excluding health insurance products and 176 days for health insurance products, as informed by IRDA.

Being a service industry, the popularity of insurance industry depends on the quality of service rendered by the company in terms of innovative products and speedy settlement of claims. The quality of service may be hampered if the products are not properly worded, under/excess priced and doesn’t meet the needs of the customer. IRDA has informed that need-based and reasonably priced insurance products by the insurance companies would increase the popularity of the industry.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.

*****

DSM/SS/Hb

Prior approval requirement for insurance products mandates regulator clearance before launch, influencing approval timelines and product design. Insurance companies must obtain prior approval from IRDA under the File and Use Guidelines before launching products; presumed clearance windows are 60 days for non-life and 30 days for life, but incomplete filings often delay assessment. Approval time depends on product complexity, pricing, features and terms; IRDA reported approval ranges of 2 to 1708 days and average lags of about 109 days for life, 103 days for general insurance (excluding health) and 176 days for health insurance.