Chennai, Aug 7 (Inditop.com) The country’s insurance regulator is planning to raise the lock-in period for Unit Linked Insurance Policies (ULIPs) by two years to five years with a view to reducing mis-selling and early lapsation.
“We are discussing the measure of increasing the lock-in period to five years so as to reduce early lapsation of policies which financially affects life insurers,” R. Kannan, a member of the Insurance Regulatory and Development Authority (IRDA), told reporters here Friday on the sidelines of an insurance seminar.
Life insurers will not be able to recover their market and administrative costs if policies get lapsed early.
“We are waiting for the consensus from the industry on the issue,” said Kannan.
An industry official told Inditop on condition of anonymity that the issue of increasing the lock-in period has already been discussed in a Life Insurance Council meet.
“A ULIP is good for a policyholder if he holds on to the policy for 10 years. But nowadays policyholders are exiting within six months,” said the official.
The regulator will also be launching a customer portal in six months through which policyholders can contact their respective insurance companies and lodge claims.
“When a policyholder registers a claim through the portal, we would also get relevant data and monitor the settlement of claims,” Kannan said.
On the non-life side, he said general insurers have reported an underwriting loss – premium income minus claims outgo – of Rs.3,179 crore for last fiscal as against Rs.2,309 crore a year ago.
Commenting on the portability for health insurance, Kannan said IRDA is planning for long-term health insurance products that can be portable.
The regulator may also bring out a white paper on the functioning of the Motor Third Party Pool.
The motor pool, set up to help insurers contain third party liabilities, is being administered by General Insurance Corp of India (GIC).
According to Kannan, the White Paper is to know the status of the motor pool and decide the further course of action.
