IRDA relaxes persistency norms for insurance agents

IRDA clarified that policies which continue to provide insurance cover to clients after the end of premium payment (auto cover policies) would be included while computing the persistency ratio

New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Tuesday relaxed norms for insurance agents by removing certain riders at pegging the persistency ratio, which refers to retention of clients, at 50%, reports PTI.

“The average persistency rate is uniformly set as 50% which is to be reckoned only on number of policies,” IRDA said in a circular.

In February, the IRDA had pegged the persistency ratio, a measure of customer satisfaction, at 50% with a rider that it should go up to 75% by 2015-16.

IRDA also clarified that policies which continue to provide insurance cover to clients after the end of premium payment (auto cover policies) would be included while computing the persistency ratio.

However, it added, the policies, which have already matured or wherein death or surrender has happened, would be exempted from calculating persistency ratio for the agent.

IRDA also relaxed the definition of ‘relatives’ that employees of both life and general insurance companies cannot engage as agents.

“The term relatives is re-defined as spouse, dependent children or dependent step children whether residing with the employee or not,” IRDA circular said.

In its earlier circular, IRDA had said that relative would include spouse, sisters, brothers, parents, sons, daughters-in-law, daughters and sons-in-law.

The circular also said that for transfer of insurance agency from one life insurer to another, the agent should mandatorily have a persistency ratio of 50%.

User

Final IPO norms for life insurers within a week: IRDA

For life insurance companies, the clause mandating a three-year track record of profitability as a precondition for tapping the capital markets has been removed in the draft guidelines on the IPO

Mumbai: The Insurance Regulatory and Development Authority (IRDA) on Tuesday said it will come out with guidelines for initial public offering (IPO) of life insurance companies within a week, reports PTI.

“We will be approaching for the gazetting sometimes later this week,” IRDA chairman J Hari Narayan told reporters here on the sidelines of Assocham’s Global Insurance Summit.

For life insurance companies, the clause mandating a three-year track record of profitability as a precondition for tapping the capital markets has been removed in the draft guidelines on the IPO.

As per the draft norms, only insurance companies that have completed 10 years of operation and have strong financial will be allowed to access the capital market.

Insurance firms planning public offers have to seek ‘formal approval’ from Insurance Regulatory and Development Authority (IRDA) and then approach the Securities and Exchange Board of India (SEBI) for final approval, the draft norms had said.

Mr Hari Narayan further said the IRDA is in the process of drafting guidelines on products. “It may take a little longer, about 10-15 days,” he added.

Further, the regulator is also planning to come out with guidelines in schemes guaranteeing high net asset value, Mr Hari Narayan said, “We are examining it because my concern is that the highest NAV guaranteed product may lead to miscommunication. We are understanding the entire issue before coming out with any guidelines.”

His comments come amid reports that the regulator is planning to scrap the highest Net Asset Value (NAV) guarantee products that account for about 20% of the total Unit Link Insurance Plans (ULIP) sales.

Under this plan, customers are guaranteed returns based on the highest NAV a policy has achieved during the full term of the plan.

User

FSLRC to decide on nominating FMC chairman on SEBI board

The Committee of Secretaries (CoS) had directed that heads of FMC and SEBI should be represented on each other’s board so that there could be policy convergence of financial sector regulations relating to capital markets

New Delhi: With a view to bridging regulatory gaps, the high-level panel tasked to re-write financial sector laws will take a call on nominating Forward Markets Commission (FMC) chairman on the Securities and Exchange Board of India (SEBI) board, reports PTI quoting a senior finance ministry official.

The Committee of Secretaries (CoS) had directed that heads of FMC and SEBI should be represented on each other’s board so that there could be policy convergence of financial sector regulations relating to capital markets.

As there is no provision for having a special invitee on the board of SEBI, the government will have to amend the SEBI Act, the official said, adding an opinion to this effect was also expressed by the ministry of law.

“In order to implement the CoS decision, the matter has been referred to Financial Sector Legislative Reforms Commission (FSLRC),” he added.

FSLRC, chaired by justice (retired) BN Srikrishna, was constituted in March this year to rewrite and streamline financial sector laws, rules and regulations in line with the economic liberalisation programme of the government.

There are over 60 Acts and multiple rules and regulations in the financial sector and many of them date back decades when the financial landscape was very different from what it is today.

Moreover, the large number of amendments in financial sector Acts over the years have increased the ambiguity and complexity of the system.

The 10-member commission was given 24 months to submit its report to the finance ministry.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)