IRDAI: Health Insurance Companies Can Now Launch Products First and Apply for Approval Later

On 1st June 2022, The Insurance Regulatory and Development Authority of India (IRDAI) issued new guidelines for the approval of the Products. It has been decided to allow Health insurance companies to launch a new product offering modification or revision of existing products under the ‘Use and File’ process.

The "Use and File" procedure allows Insurance Companies to Launch a product and file for approval after the launch. New guidelines intend to empower Insurance companies to design and price the product based on the following factors-

• Their Philosophy is to increase Insurance Penetration
  
  
• Design Products to meet the Target Segments
  
  
• Design Products that are simple to understand and easy to implement 

This stepping stone will enable the insurance industry to launch appropriate products without having to wait for approvals. 

The procedure “Use and File” means that insurers can introduce their products to the market  &  file for approval with IRDAI within seven days from the launch. However, insurers now have a greater responsibility to ensure the robustness of their product and pricing along with the policyholder’s safety. 

Guidelines on USE & FILE by IRDAI 

According to the regulator, all add-ons or riders introduced or modified/revised sold by health insurance firms are authorized to be launched through the 'Use and File’ procedure. They will, however, have to follow certain additional rules. They are as follows- 

Insurers are responsible for ensuring that product price is viable, self-sustaining, and affordable to the target market.

Any pricing changes will be based solely on the underlying claims experience (Incurred Claims Ratio) and the need to keep the product viable and self-sustaining. Insurers must publish the rationale for the price change on their website, as well as the underlying claim experience (Incurred Claims Ratio) of the product that led to the price change.

• The products/add-ons must be priced according to commonly established standards.
  
  
• Premium prices must reflect the benefits, terms, and conditions of the underlying products/add-ons and must not be discriminatory.
  
  
• Management Expenses loading for add-ons will be evaluated on a case-by-case basis.

This procedure will make every process related to health insurance easier for insurers.