Insurance sector to witness massive changes

The insurance sector is expected to witness massive changes after the finance ministry intervention. The sector has been characterised by diminishing sales in the past couple of years, according to media reports.

After a meeting with public and private sector life insurers, the finance ministry has formed eight committees headed by senior officials of insurers. The chief executives of these insurance companies would examine issues which have hampered the growth of the sector. The panel will study a wide range of issues from distribution to product approval, taxation to bancassurance, among others, the reports added.

The insurers said that IRDA’s (Insurance Regulatory and Development Authority) latest proposal regarding changing norms for traditional products prompted the need to re-consider at the issues as those norms, if implemented, would severely affect the sector’s growth.

The insurance regulator suggested that for traditional products, guaranteed surrender value (GSV) needs to be increased and that traditional product holders would get the premium and bonus after seven years. The move would affect margins and commission of insurance agents.

The insurance companies have suggested IRDA to approve or reject a product in a specific period. Besides, insurers have suggested tough norms for approving pension products.

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