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Thursday August 16, 11:00 PM
'Complicated' insurance schemes must go: IRDA |
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By IBNLive.com
New Delhi: The insurance regulator IRDA is set to ban all those unit linked insurance products that are too complicated for the customers to understand. This ban may affect Bajaj Allianz Life's most popular products.
Bajaj Allianz Life recorded a Rs 90 crore profit this year making it the second private life insurer to do so. It’s profits were driven largely through - Capital Unit Gain- an actuarial funded product.
Unlike other ULIPs where the customer is charged for fund management and administration before allocating units, this product deducts the charges at the end of every month by cashing units in the policyholder's fund, thus making it difficult for a customer to keep track of the various charges.
The IRDA has decided the product must go.
IRDA Chairman, CS Rao said, “The committee of actuaries have looked into it and they feel that actuarial funding is not appropriate. Though technically there is nothing wrong with it but the product is so complicated that the customer does not know what risks he is running. So we have suggested the product to be withdrawn and we will take action on it."
Aviva life insurance also has 5 actuarial funded products - that will also be withdrawn from the market. Although none on them were as popular as Bajaj Allianz's capital unit gain.
The regulator has decided to give these companies 15 days time frame to pull the products off the shelves and replace them with other products.
While Bajaj Allianz and Aviva Life have refused to comment on the regulators decision to ban these products, the decision does mean they will need to go back to the drawing board and rework their entire product strategies.
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