The Insurance Regulatory and Development Authority (IRDA) has said it has no plans to cap the charges levied by life insurers on traditional savings policies. The insurance regulator also said it would approve the new Unit Linked Insurance Plan (ULIP) in time for the players to sell from September 1 onwards and it is not out to micro manage the sector.
"The traditional products — term, endowment and money back — are mature and well structured. We don't have a plan to bring any cap on charges there," IRDA chairman J. Hari Narayan told reporters here on Friday evening on the sidelines of a health-cum-term assurance policy launch function organised by Star Health and Allied Insurance Company Ltd.
When pointed out that life insurers are planning to offer corporate agents commissions up to 80 per cent of the premium on traditional products, he said: "If we come across any such misdeeds, we will handle that situation." As per IRDA’s latest guidelines governing ULIP, the maximum first-year commission that can be paid to distributors will be around 12 per cent.
"Corporate agents who are getting around 70 per cent now are naturally unhappy. They want insurers to find new ways of ensuring that their earnings remain intact. Traditional products are opaque and easy to manipulate," a senior industry official told IANS.
Queried about the life insurer's fears of starting next month without a ULIP if the IRDA does not approve the products filed at least by August 27, Narayan said: "We will approve the products in time."
More than 60 ULIP products have been filed with the IRDA for approval during the last two days. The IRDA had said that life insurers have to design and file new products confirming to the new ULIP regulations so as to sell them from September 1 onwards.
Allaying the fears of IRDA micro managing the insurance sector with its proposed regulations governing the individual agents, Narayan said: "We have just released an exposure draft on governing the agents. We will take a call once we get the reactions.”