Standard Technical Note (Template)- Motor Insurance

Page 1 of 10 Cir No. IRDAI/ACT/CIR/MISC/070/04/2021 Date: 01.04.2021 To CEOs/CMDs of all General Insurance Companies Sub: Standard Technical Note (Template)- Motor Insurance 1. This circular is issued in exercise of the power vested under section 14(2)(e) of the IRDA Act, 1999. 2. Reference is drawn to the Circular No. IRDAI/NL/GDL/F&U/030/02/2016 dated 18th February, 2016 on “Guidelines on Product Filing Procedures for General Insurance Products”. In terms of the above Circular, insurers are required to submit a Technical Note detailing pricing aspects of general insurance product as a part of filings. 3. In order to expedite the product clearance process, it has been decided to standardize the Technical Note so that insurers can provide all necessary details in a prescribed standard format. This will help to ensure uniformity amongst insurers in the matter of filing pricing and product related information for general insurance products. 4. Insurers shall submit Technical Note providing complete information and duly signed by the Appointed Actuary as per the prescribed format. The format is enclosed as Annexure – 1 with this Circular. 5. Discounts/loadings, if any, shall be offered by the insurer as per the criteria mentioned in the Technical note. 6. This Standard Template shall come into force with immediate effect. (P K Arora) Member (Actuary) सर्वेनं/ Sy.No: -115/1 फाइनंशियल शिस्ट्रिक्ट, गच्चीबाउली /Financial District, Gachibowliनानकरामगुिा/Nanakramguda, हैदराबाद /Hyderabad – 500032 दूरभाष:/Phone No: 040-20204000 J1·~ ~Heft~ Jh~i RIR~jqq-i 3ffi Pcl&>ift ~&i{OI l.,a!, INSURANCE REGULATORY AND lr.tal DEVELOPMENT AUTHORITY OF INDIA Technical Note – Brand Name of the Product/Add-On Technical Note Version No: Initial of AA- 2 |Page Annexure – 1 (Cir No. IRDAI/ACT/CIR/MISC/070/04/2021 dated 01.04.2021) Technical Note (Template) For “Brand Name of the Product/ Add-on” (Please strike off Product or Add-on as applicable) Name of Insurer :_____________________________________ Line of Business : Motor Product/ Add-on :_____________________________________ Name of the Appointed Actuary/ Panel Actuary :_____________________________________ Name of the Mentor (if applicable) :_____________________________________ This technical note supersedes the Technical Note (version number* _____) dated DD/MM/YYYY. This technical note is based on latest File and Use document submitted to Authority as on DD/MM/YYYY. *Initial version number shall be 1. It shall get incremented by 1, every time an updated technical note is submitted to the Authority. Technical Note – Brand Name of the Product/Add-On Technical Note Version No: Initial of AA- 3 |Page Section 1. General Information SI.No. Description Details 1.1 Brand name of Product/ Add-on 1.2 New or Modification of existing Product/ Add-on If modification of existing product/Add-on, please mention UIN. New/Modification 1.3 Category of Vehicle a. Two wheeler b. Private Car c. Commercial Vehicle Goods Carrying Vehicles Passenger Carrying Vehicles d. Miscellaneous Type 1.4 Type of policy a. Package Policy b. Bundled policy c. Standalone OD d. Standalone Liability Policy e. Standalone CPA 1.5 Target Group 1.6 Is the Product Reinsurance driven? Yes/ No 1.7 If the filing is for base product, provide the details of Add-ons that will be sold alongside, if any: Name of Add-on with UIN No, Date of approval Brief Description of Benefits under the Add-on Whether Benefit based/Indemnity based Confirm that there is no overlap of benefit between base product and add-on. 1.8 If the filing is for Add-on, provide name of Base product along with UIN, date of approval. Confirm that there is no overlap of benefit between base product and add-on. Section 2. Summary of Benefit Structure 2.1 This section should provide benefit structure for each variant/option of Product/Add-on. In case of modification of existing Product / Add-on, please provide comparison of benefit structure in the following format between the proposed modification and existing Product / Add-On along with the reasons for changes. Table 1 SI.No. Benefit covered Benefit Amount Deductibles & Excess Sum insured limit / sub-limit 1 Indemnity: a) b) 2 Fixed: a) b) I I I I Technical Note – Brand Name of the Product/Add-On Technical Note Version No: Initial of AA- 4 |Page Section 3. Data used 3.1 Source of Data SI.No Item Description i) Source of Data Internal / External ii) Indicate the source of internal data, if used in pricing Provide the name of the source Product or Add-on, whose experience has been used in pricing. iii) If External data is used, indicate the source of external data IMT/ Reinsurer data/ IIB Data/ Industry data/other countries data/ any other data source o If IIB Data is used Provide the publication reference with date. o If Reinsurer data is used Provide necessary details of reinsurance including the type of reinsurance, cost of reinsurance, retention level etc., o If Industry data/ other countries data / any other data source is used Provide the reference from where the data has been collected. 3.2 Data Checks, Adjustments and experience i) Justification of the Data Source. ii) Details of checks, issues and limitations of data. Provide adjustments done to data, data related issues, if any and how these issues are addressed. iii) Comment on quality and completeness of data. iv) If internal data is used, confirmation that the product (s) mentioned in 3.1.ii) above have similar benefits and coverage as the current product, for which the approval is being sought. If the same is not the case, mention list of adjustments done to data to suit the current product. v) Actual experience in terms of loss ratio, frequency, severity etc. of at least three years of similar product whose data is utilized for pricing new product. In case of modification, similar information of existing product / add-on has to be provided along with the expected versus actual Premium income, Loss Ratio, Combined Ratio and Profit Margin for last three years. vi) Own experience shall be used for the purpose of pricing. However, where own experience is available but not used in pricing, appropriate justification is to be provided. 2.2 Options 2.3 Policy Term ____ Years 2.4 Mode of premium payment 2.5 No claim bonus: 2.6 Others (if any): Technical Note – Brand Name of the Product/Add-On Technical Note Version No: Initial of AA- 5 |Page Section 4. Assumptions and Methodology i) Assumptions used in pricing the product/Add-on along with justification. ii) Description of the methodology used for each benefit, for example, whether frequency – severity, basic burning cost, GLM or any other statistical method has been used. iii) Rationale of using a particular methodology. This should include details of rating of long term policies, as applicable along with appropriate justification. iv) Explanation of Extrapolation / smoothening procedures adopted, if any. v) Details & rationale of any relativity used in deriving the premium rates. vi) Details of how the impact of excess and any other specific feature have been allowed in pricing (if the same is not adjusted in the data itself). vii) Details of how sub-limits / cap, for instance on claims etc., have been considered in estimation of premium rates and justification thereon. viii) Details as to how No Claim Discount is factored in pricing. ix) Explanation of whether a claim impacts NCD or not and justification of how the same is considered in pricing.