IRDAI forms committee to discuss approval of Index-Linked Life Insurance Products in the market

The Insurance Regulator, IRDAI has formed a committee to discuss approval of Index-Linked Life Insurance products in the market amidst applications from various stakeholders. Index linked life insurance means the sum assured (or sum insured) gets a boost year-after-year to keep it inline with the Retail Price Index (RPI).

The Insurance Regulator, IRDAI has formed a committee to discuss approval of Index-Linked Life Insurance products in the market amidst applications from various stakeholders. Index linked life insurance means the sum assured (or sum insured – the total amount your life insurance will pay out if you pass away) gets a boost year-after-year to keep it inline with the Retail Price Index (RPI).

The Insurance Regulatory and Development Authority of India’s (IRDAI) on September 1, 2020, “The Authority is in receipt of requests from life insurers to allow them to offer index linked products. Current IRDAI, product regulations do not specifically permit insurers to sell index linked products. However, taking into considerations requests from life insurers, it has been decided to constitute a working group to examine various aspects of Index Linked products in Life Insurance Segment.”

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Currently, 6 members are part of the working group including Mr. Dinesh Pant, Member Appointed Actuary, LIC of India; Mr. Anil Kumar Singh, Aditya Birla Sun Life Insurance Co. Ltd. and Mr. Manish Kumar, Chief Investment Officer, ICICI Pru Life Insurance Co. Ltd.

Through IRDAI/ACTL/ ORD/MISC/224/08/2020 dated 31.08.2020, the authority has released Terms of reference of the Working Group as follows:

  • To examine the need for index-linked products in India especially w.r.t availability of various indexes and how it will better serve the needs and interests of customers relative to traditional savings product.
  • To examine the Index linked products, which were earlier available for sale in the Indian market in terms of product structure, ease of customer understanding and administrative processes, sales volumes and any other matter of relevance.
  • To study practices of other jurisdictions in respect of Index Linked product structure and their operations.
  • To provide recommendations on specific aspects like product structure and its pricing and reserving along with suggestions on possible amendments to current Regulations like Product and Investment Regulations.

The Working Group may invite external experts in the meeting for discussion on need basis. The group is directed to submit its report within two months from the date of notification of the order.

Recently, the IRDAI notified that PUC would be mandatory for vehicle insurance renewal. Read here.