Big decision by IRDAI! Insurance companies may give relief to consumers
The Insurance Regulatory and Development Authority of India (IRDAI) has decided to give more freedom to the insurance companies.
The Insurance Regulatory and Development Authority of India (IRDAI) has decided to give more freedom to the insurance companies. The insurance company regulatory body had given its nod to the insurers that allow them to increase or decrease the insurance premium by up to 15 per cent, subject to their claim experience in a particular sector. Therefore, in case an insurance company faces higher loss ratio or higher claim, it need not file permission to the IRDAI for increasing the insurance premium.
According to the industry insiders if an insurer faces a better than expected experience in a certain category, then it is possible that they might pass on the benefits of underwriting profits in the form of lower premiums, however, if they face heat due to the higher claims enhancing their higher loss ratio, then they can increase the premium to pare the losses an insurance company has incurred.
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The insurance companies operating in the Indian market have hailed the IRDAI decision citing option to pay the premium on an installment basis was available only for life insurance companies. Bringing the installment mode to health might turn out as an incentive to the people to buy an insurance cover. The regulatory body has also given its nod to the insurers to add approved standalone riders or add-ons to approved individual health insurance products without having to file the product again. It also permitted insurers to change the sum insured made available to a policyholder if it is within the range filed for the original policy.
Speaking on the IRDAI move to provide freedom to the insurance companies Manikaran Singh, a SEBI registered tax and investment expert said, "The IRDAI move is a welcome step from the corporate point of view as it would give insurance companies to remain in business with a sustained growth rate. however, at the same time, the IRDAI's responsibility becomes bigger as they will have to keep a check on the balance sheet of the insurance companies so that the benefit of their income is passed on to the premium holders on time."
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