Death benefit upped to 7x under Irdai draft norms for regular life products

The Insurance Regulatory and Development Authority of India (Irdai) in a late notification on Friday evening notified new draft product guidelines for linked and non-linked life insurance policies. One of the significant changes brought under these draft guidelines includes increasing the minimum death benefit to seven times for regular premium products and to 1.25 times for single premium products for all ages.
"There were significant changes in the trends in product structures driven by the customers’ needs, wants and preferences...Apart from this, innovations in the methods of placing the products in the market, coupled with innovations in product benefits and structures is the main driving force which necessitated review of the existing product regulations," the notification states.

The move, Irdai says that is prompted also by the fact that for the past few years industry executives had provided various suggestions to improvements in current product regulations, so as to be line the dynamics of today's insurance market environment, which invariably includes global insurance market dynamics.
Other changes that include: for pension products customers must be allowed to commutate upto 60 per cent of the policy sum assured, while those with market-linked pension products can partially withdraw their corpus.
Unit-linked insurance product (ULIP) holders will be allowed to switch their asset allocation(s) during the settlement period, "to manage their funds better in a volatile market situation," Irdai says.
Insurers will not be allowed to design individual term, group term and credit and micro insurance products across a range of policy terms, while in the case of group products the regulator will modify some guidelines so that they can be customer based on the customers (company or corporate) requirements.
Further, the category of Variable Insurance Products has been removed while the provisions for non-linked Variable products have been simplified.
The regulator says that they have also introduced new criteria governing the appointment of independent actuary(s) by life insurance companies.
Companies can file send their comments and suggestions on the draft regulations for linked and non-linked products, respectively, by November 15.

Irdai permits LIC to pick up to 51% stake in debt ridden IDBI Bank

Insurance regulator Irdai on Friday permitted LIC to pick up to 51 per cent stake in the debt-ridden IDBI Bank, sources said.
The decision, they said was taken at a meeting of the Board of Directors of Insurance Regulatory and Development Authority of India (Irdai) at Hyderabad this afternoon.
LIC currently hold 11 per cent stake in the bank.
Sources added that if the deal goes through, the IDBI Bank will get the capital support of Rs 100-Rs 130 billion
ALSO READ: IDBI Bank gains 12% ahead of Irdai meeting
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State-owned LIC has been looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.
"You will get to know whatever is the decision. You will get to know after the minutes of the Board meeting are approved. We will be posting it on our website," Irdai Chairman Subhash Chandra Khuntia told reporters after the Board meeting in Hyderabad.
However, according to sources the regulator has permitted the LIC to pick up to 51 per cent stake in IDBI Bank, thereby relaxing existing rules for investment.

ALSO READ: LIC may enter banking space; eyes majority stake in IDBI Bank
As per norms, an insurance company cannot hold more than 15 per cent stake in a company.
IDBI Bank is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 556 billion at the end of latest March quarter. During the three months, the lender's net loss stood at Rs 56.63 billion.

Corruption at regulator? Irdai member aided, abetted graft, says SAT

The Securities and Appellate Tribunal (SAT) has set aside an order passed by the Insurance Regulatory and Development Authority of India (Irdai) in a case filed by UK-based Atkins Special Risks, an insurance broker, and said the insurance regulator’s member P J Joseph “aided and abetted” corruption.
The tribunal has directed Irdai to entrust the matter to an officer other than Joseph for passing a fresh order. “In our opinion, the order passed by P J Joseph, member (non-life), Irdai, on January 9 which, in our opinion, is passed in gross abuse of the process of law and dereliction of duty,” said Justice J P Devadhar, presiding officer, SAT.
The case pertains to appellant Atkins Special Risks, a specialised risk insurance and re-insurance with core competency in marine and energy insurance. Between 2002 and 2012, the company had provided international re-insurance cover to Jagson International on yearly commission of 27.5 per cent of the premium that was paid for the cover.
From 2010, Jagdish Gupta, chairman of Jagson International, started demanding a cut from the commission earned by Atkins (appellant), which the latter refused. Later, in 2012, the re-insurance business of Jagson was taken away from the appellant and given to Marsh India Insurance Brokers.
The appellant had then called for a detailed investigation by a global investigating firm. “Reports submitted by that firm (Atkins) confirmed that kickbacks were given to Jagdish Gupta by Marsh for diverting the reinsurance business from the appellant to Marsh,” the SAT order noted.
The SAT in the order said the appellant had filed a complaint with Irdai in August 2015 but no action was taken.
Atkins then filed a writ petition in the Telangana and Andhra Pradesh High Court, which directed the insurance regulator to consider the plea of Atkins.
The matter was heard by Joseph who took a decision to dispose of the complaint, stating that Atkins had not submitted any documentary proof, material information or evidence in support of its contention.
“Perusal of the complaint filed by the appellant clearly shows that the appellant had relied on documentary evidences in support of the contention that Gupta had sought bribe and was bribed by officers of Marsh for diverting the re-insurance business from the appellant to Marsh,” the SAT noted.
It further said that to hold that Atkins had not submitted any documentary proof would be totally false. “We fail to understand as to how a member (non-life) could make such false statements in the impunged order. In our opinion, the impunged order passed by Joseph virtually amounts to aiding and abetting corruption in the insurance business by the regulator, which cannot be tolerated,” the SAT said in its March 16 order.
The appellate tribunal, however, said that the said judgment made it clear that the SAT has not expressed any opinion on the merit of the complaint filed by appellant.
Atkins in its complaint with Irdai had provided specific dates on which Gupta had sent emails demanding kickbacks. It was also alleged that during a telephonic conversation, Gupta had told Atkins that Marsh had agreed to pay him $400,000 (~26 million) in order to obtain Jagson’s re-insurance business.
The complaint argued that in view of evidence gathered as also the third party evidence regarding kickbacks, “it is apparent that Indian Insurance Act and Insurance Regulatory and Development Authority (Insurance Brokers) Regulations have been violated.”