IRDA News: `Pension products must have annuity for approval’

J Hari Narayan hit out at companies filing for approval of pension products that do not have the pension element in it. Addressing reporters at an insurance summit organised by Assocham, he said: “Products which have been called pension products and filed for approval are not pension products. They may call it such but it is not. It’s much like a mutual fund product in which you make a periodic investment and anytime can pull it back… Hence, it will not be approved.”

“If it’s a proper pension product, it leads into an annuity and if there is any withdrawal during the tenure of the products, certain proportion can be commuted in cash but the balance must be rendered again into an annuity…Such products are cleared but those which have no pension element in it will not be approved,” he said.

The IRDA says product approvals are not being unduly delayed. “The median time for clearance is 72 days for life insurance products and that is at par for financial product clearance as far as global experience.

“And the issue is not how fast your products are cleared but how good the products are.” He mentioned that the attrition rate of agents is very high and companies must take corrective steps. “There are 7 lakh agents supplied annually to the industry while the problem is that the termination of the agents by companies is more than 7 lakh…this needs to be addressed,” Hari Narayan said. According to him, companies must draw from the other industries and countries. Merely increasing commission is not the solution as that could affect customers’ profitability. “There has to be a balance…maybe more motivation is required and greater care for the psychological measures while hiring the agent.”.

On the idea of Mutual Funds trying to sell products having an insurance element, he informed that the regulator will try bundling and tying up insurance and non-insurance products for which appropriate guidelines will be announced shortly.

http://www.thehindubusinessline.com/industry-and-economy/banking/article3932347.ece