IRDA chief does some plain talking

In a rare admission by a financial sector regulator, J. Hari Narayan, Chairman, Insurance Regulatory Development Authority, said the regulator had failed the policyholders when it came to Unit-Linked Insurance plans (ULIPs) and pension products prevalent two years ago . ULIPs and pension products were subsequently revamped by the regulator.

“We failed in the understanding of allowing free market space and design for companies. We failed the policyholders. We allowed largely toxic products to prevail in the market and destroy public confidence in insurance,” the IRDA chief said.

Hari Narayan was addressing the media during the Global Conference of Actuaries in Mumbai, in possibly his last public address ahead of his superannuation on February 20.

The insurance industry has laid the foundation for stable growth with more trust even though it is witnessing a flat growth at present, said the IRDA chief.

The insurance regulator has finalised a standard proposal form for life insurance products which requires insurers, agents and brokers to sign on the recommendations they make to the customers, thereby putting the onus for selling the insurance product on them.

Equity investment

Hari Narayan clarified that the equity investment cap which was recently raised from 10 to 12-15 per cent depending on their assets under management was applicable for all insurance companies, including Life Insurance Corporation (LIC).

“There is a difference in the legal interpretation of the government on LIC and their view of the law is different from IRDA’s view. Even though the government had expressed its intention of permitting LIC to have an exposure of 30 per cent, so far to the best of my knowledge no such notification has been issued,” he said.

deepa.nair@thehindu.co.in

Source: thehindubusinessline