The Insurance Regulatory and Development Authority (IRDA), India’s insurance regulator, recently announced several draft insurance regulations, with the aim of reducing “unfair practices” and closing an “information gap,” according to A. Giridhar, executive director of IRDA. [1] The regulation is proposed primarily in response to improper sales practices of unit-linked life insurance products to a mainly financially illiterate market in India. Unit-linked life insurance is a form of life insurance which is purchased in units, the price of which is based on the net asset value of an investment fund.
The proposed regulations include:
• An amendment of IRDA regulations to protect policyholders’ interests and require enhanced disclosure of insurance product characteristics.
• Guidelines for telephone and internet marketing due to the complex nature of insurance products.
• Standardization of terms and conditions on unit-linked insurance products.
According to a recent article in InsuranceNewsNet, first-year premiums of this market segment increased to INR 600 billion (USD 13 billion) in 2009-2010 from INR 443 billion (USD 9 billion) in the previous year. [1]
By Jennifer Shevock, Research Associate
About the Insurance Regulatory and Development Authority:
The Insurance Regulatory and Development Authority (IRDA) is India’s insurance regulatory organization. Its objective is to protect the interests of policyholders and regulate the industry.
Sources and Additional Resources:
[1] “India’s Regulator Seeks Consumer Protection Amid Rapid Insurance Distribution Changes” June 29, 2010. http://insurancenewsnet.com/article.aspx?id=202871&type=newswires
MicroCapital Universe: Insurance Regulatory and Development Authority: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Insurance+Regulatory+and+Development+Authority
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