File and Use Procedure for Minor… — IRDA/ACT/CIR/MISC/054/03/2017

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File and Use Procedure for Minor… — IRDA/ACT/CIR/MISC/054/03/2017 | IRDAI circular · Complied AI

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What changed

Life insurance companies apply a simplified File and Use procedure for minor product modifications without completing the full approval process. The life insurer withdraws the existing product version before launching the modified version. The life insurer submits the filing documents and certificates signed by the appointed actuary and chief executive officer to the authority within seven days from the launch date. The life insurer increments the product version number in the unique identification number. The life insurer sends a quarterly statement regarding modified products within fifteen days from the end of every quarter.

What you must do

The insurer withdraws the existing version of the product or rider from the market for new business before the launch of the modified version.
The insurer sends a complete set of File and Use, sales literature, policy document, key features document, proposal form, certificates, and other documents to the Actuarial Department with a copy to the Life Department within seven days from the date of launch.
The insurer allots the next higher version of the unique identification number to the modified product.
The insurer sends a statement regarding modified products or riders launched during the quarter to the Actuarial Department with a copy to the Life Department within fifteen days from the end of every quarter.

Key dates

Effective from: 07 Mar 2017
Effective date of circular: 07 Mar 2017

Who is affected

All the CEOs of the Life Insurance Companies

Thresholds

Changes in premium rates, charges, and benefit amounts under approved products and riders on account of commission regulations are limited to plus or minus five percent of the approved product or rider.
Changes in premium rates and benefit amounts under Non-Linked Non-Par products on account of interest rate changes are limited to plus or minus fifteen percent of the originally approved product.
Changes in premium rates, charges, and benefit amounts for new distribution channels are limited to plus or minus ten percent of the approved products or riders.

If you do not comply

The authority withdraws the modified version of the product or rider from the market immediately if any violation of regulations, guidelines, circulars, or instructions is noticed.

Ask about this circular

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Document text

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Official PDF

भारतीय बीमा विनियामक और विकास प्राधिकरण INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA CIRCULAR

Ref No.: IRDA/ACT/CIR/MISC/054/03/2017

7th March, 2017

All the CEOs of the Life Insurance Companies

Re: File & Use procedure for minor modifications under existing products and riders offered by Life Insurers

Change in current File and Use procedure

The products offered by Life Insurers need to keep pace with changing requirements of consumers as well as ensuring compliance with extant regulatory provisions. This may sometimes require minor modifications to already approved products. The need to address the above necessitates quicker approval of the product modifications.

In view of the above and to make the product modification process more efficient, it has been decided that the following minor modifications to the approved products and riders will be allowed without complete procedure under File and Use:
- 1.1. Changes in premium rates/charges and benefit amounts under approved products and riders on account of implementation of IRDAI (Payment of commission or remuneration or reward to Insurance Agents and Intermediaries) Regulations, 2016
- 1.2. Changes in premium rates and/or benefit amounts under Non-Linked Non Par products (including annuities) on account of change in interest rates under premium basis
- 1.3. Addition of already approved riders to approved products
- 1.4. Addition of premium payment modes (frequencies)
- 1.5. Addition of new distribution channel
- 1.6. Addition of already approved funds to approved unit linked products
- 1.7. Extension of premium table to higher/lower ages or to longer /shorter premium payment terms and policy terms under approved products/riders
- 1.8. Change in minimum / maximum premium and/or benefits amounts
The insurers may simultaneously make one or more modifications mentioned above to the products and riders already approved subject to the condition that benefit structure has not changed compared with last modified / originally approved version.

The existing File and Use procedure is applicable for all other modifications not covered above and for new products / riders.
General Norms to be satisfied:

The modifications mentioned in para 1 above can be made only if the norms mentioned below in respect of each modification are satisfied
- 2.1. There is no detrimental change in premium rates/charges, benefit structure or any other provision in respect of policies already sold under existing versions of the product / rider.
- 2.2. There is no change in benefit structure of the product / rider.
- 2.3. The premium rates/charges, benefit structure, terms and conditions under modified product and rider are, workable and sound, the assumptions are reasonable and premium rates fair.
- 2.4. The premium rates/charges under modified product and rider are equitable between policyholders of different distribution channels.
- 2.5 Other conditions stipulated at the time of approval of original product (e.g. requirement that in respect of Par products, the projected maturity benefit is at least equal to premiums paid on the basis of projected investment return of 4% p.a. throughout the policy term etc.) are compiled in respect of modified product also.
- 2.6. The modified products and riders comply with all the extant norms and Regulations of the Authority. This includes but not limited to IRDA (Non Linked Insurance Product) Regulations 2013, IRDA (Linked Insurance Product) Regulations 2013, clarifications issued thereon, IRDA (Protection of Policyholders' Interests) Regulations 2002, IRDAI (Expenses of Management of Insurers transacting life insurance business) Regulations, 2016 and IRDAI Circular under Ref: IRDA/ACT/CIR/MISC/054/03/2017 dated 7th, March 2017 on "File and Use procedure for minor modifications under existing products and riders offered by Life Insurers".
Specific norms to be satisfied under each modification:

In addition to above generic norms, the following norms specific to each modification shall also be complied with. The norms in respect of each modification are stated below:
- 3.1. Changes in premium rates/charges and benefit amounts under approved products and riders on account of implementation of IRDAI (Payment of commission or remuneration or reward to Insurance Agents and Intermediaries) Regulations, 2016 will be allowed provided the following norms are satisfied:
  - 3.1.1. The change in premium rates/charges and benefit amounts after modification are limited to +/- 5% of the premium rates and benefit amount of the already approved product and rider.
  - 3.1.2. There is no change in any other parameter in the premium basis except commission or reward or sales related expenses.
- 3.2. Changes in premium rates and/or benefit amounts under Non-Linked Non Par products (including annuities) on account of change in interest rates under premium basis provided the following norms are satisfied:
  - 3.2.1. The change in premium rates and benefit amounts after modification are limited to +/- 15% of the premium rates and benefit amounts under originally approved product.
  - 3.2.2. There is no change in any other parameter in the premium basis except investment return, inflation of expenses and risk discount rate.
  - 3.2.3. There shall be a gap of at least one month after the last modification under this product/rider on account of change in interest rate in the premium basis.
This para 3.2. mentioned above supersedes para 5 of Circular Ref: IRDA/ACTL/REG/CIR/158/07/2014-15 dated 7th July, 2014.
- 3.3. Addition of already approved riders to approved products provided the following norms are satisfied:
  - 3.3.1. There is no change in premium rates/charges and benefit amounts of the riders which are being added.
  - 3.3.2. There is no change in premium rates/charges and benefit amounts of the products to which the riders are being added.
- 3.4. Addition of premium payment modes (frequencies) provided the following norms are satisfied:
  - 3.4.1. There is no change in premium rates/charges, benefit amounts and charging structure under products and riders to which the new premium payment mode (frequency) is being added.
  - 3.4.2. The premium mode (frequency) being added is monthly, quarterly, half yearly or annual and that the resulting premium amounts under each mode (frequency) are consistent with the premium amounts under other premium modes (frequencies) of the same product and other similar products.
  - 3.4.3. The basis for arriving at the premium amounts under premium modes being added is disclosed in File and Use in track change mode and that it will be consistent with basis used for other modes for the same product/rider and other products/riders of similar nature.
- 3.5. Addition of new Distribution Channels provided the following norms are satisfied:
  - 3.5.1. There is no change in premium basis of approved product/rider except the commission rates, rewards and expenses under distribution channels being added now.
  - 3.5.2. There is no change in premium rates/charges and benefit amounts under distribution channels already existing under the approved product.
  - 3.5.3. The change in premium rates/charges and benefit amounts, if any, pertains to only those distribution channels which are being added now. The change is limited to +/- 10% of the premium rates and benefit amounts under the approved products/riders.
- 3.6. Addition of approved unit linked fund to approved unit linked product provided the following norms are satisfied:
  - 3.6.1. There is no change in charging structure and other norms of approved unit linked fund which is being added now.
  - 3.6.2. There is no change in charging structure and other norms of unit linked product to which the fund is being added.
- 3.7. Extension of premium table to higher/lower ages or to longer /shorter premium payment terms and policy terms under approved products/riders provided the following norm is satisfied:
  - 3.7.1. There is no change in premium basis and other terms and conditions under the approved products/riders and that the same basis is being used for calculation of premium rates/charges and benefit amounts under extended ages, premium paying term and policy terms.
- 3.8. Change in minimum / maximum premium and/or benefits amounts provided the following norms are satisfied:
  - 3.8.1. There is no change in premium basis of the products/ riders.
  - 3.8.2. There is no change in premium rates/charges and benefit amounts under product and riders.

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File and Use Procedure for Minor Modifications under Life Products

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