Use and File procedure for certain modifications under existing products an

Dt·i1i:fi ~IH{14 ~ ~~4141~ ~ - ~ INSURANCE REGULATORY AND ir.iai DEVELOPMENT AUTHORITY OF INDIA Ref No.: IRDAI/ ACT /CIR/MISC/124/07 /2019 To Chief Executive Officers / Principal Officers of Life Insurers. Date: 26 July, 2019 Re: Use and File procedure for certain modifications under existing products and riders offered by Life Insurers This circular is issued in accordance with powers vested under Section 14 (2)( e) of the IRDA Act, 1999 read with Section 34(1) of the Insurance Act, 1938. ' This circular shall come into force with immediate effect. This circular repeals circular Ref: IRDA/ACT/CIR/MISC/054/03/2017 dated 7 March 2017 regarding File and Use procedure for minor modifications under existing products and riders offered by Life Insurers. 1. Change in current File and Use procedure: T9 make the product modification process more efficient, it has been decided that the following modifications to the approved products and riders will be allowed without complete procedure under File and Use: 1.1. Change in premium rates/charges and/or benefit amounts under approved products and riders on account of implementation of IRDAI (Non-Linked Insurance Products) Regulations, 2019. 1.2. Change in premium rates/charges and/or benefit amounts under approved products and riders on account of implementation of IRDAI (Unit Linked Insurance Products) Regulations, 2019. 1.3. 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. 1.4. Changes in premium rates and/or benefit amounts under Non-Linked products on account of changes in Mortality assumptions under premium basis. 1.5. Changes in premium rates and/or benefit amounts under Non-Linked products on account of changes in Morbidity assumptions under premium basis. 1.6. Changes in premium rates and/or benefit amounts under Non-Linked products on account of changes in expenses assumptions under premium basis. 1.7. Changes in premium rates and/or benefit amounts under Non-Linked products on account of changes in lapse, surrender and paid-up assumptions under premium basis. 1.8. Addition of already approved riders to approved products. 1.9. Addition of premium payment modes (frequencies). fR ~ ~,....,.,..,.= Page 1 of 17 ifcr ;:r, 115/1, ~~. rt lrlif>(il41:S I, ~-500 032, 'lffia I Survey No. 115/1, Financial District, Nanakramguda, Hyderabad-500 032, India 6) : +91-40-2020 4000 ~ : www.irdai.gov.in 6) : +91-40-2020 4000 Website : www.irdai.gov.in 1.10. Addition of new distribution channel. 1.11. Addition of approved funds to approved unit linked products. 1.12. Extension of premium table to higher/lower ages and/or to longer /shorter premium payment terms and policy terms under approved products/riders. 1.13. Change in minimum I maximum premium and/or benefits amounts. 1.14. Change in tax rate assumption for the Insurer. 1.15. Change in Reinsurance arrangements. 1.16. Addition of one or more payment modes to mcome benefits payable to policyholders. 1.17. Change in premium rates/charges/ benefit amounts or any other norm under Group Savings Products. The existing File and Use procedure is applicable for all other modifications not covered above and for new products / riders. ' 2. 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, where such changes are applied to the existing policy contracts. 2.2. There is no change in benefit structure of the product I rider. 2.3. The premium rates/charges, benefit structure, terms and conditions under modified product and rider are workable and sound, the underlying assumptions are reasonable and preriium rates are fair. 2.4. The premium rates/charges under modified product and rider are equitable between policies sold through different distribution channels. 2.5. The premium rates and charges have been derived using g~nerally accepted actuarial principles. 2.5.1. A few examples of generally accepted actuarial principles are given below: 2.5.1.1. Premium rates/ charges/ benefits under life insurance products vary by age. 2.5.1.2. There is consistency between the investment return assumption and assumption for inflation of expenses while deriving premium rates. The above list is for reference only and shall not be considered as exhaustive. Page 2 of 17 2.6. The basis for change is stated in track change mode in F&U application and that it is consistent with basis used for similar type of products/riders. 2.7. The changes in premium basis mentioned in Para 1.4 to 1.7 shall be supported by comparison of actual experience with proposed change in that assumption over a period of 3 to 5 years under that product/rider and/or that product segment/rider segment as disclosed in detail in F&U application as an Appendix to F&U application. 2.8 Other conditions stipulated at the time of approval of the product under File and Use procedure are complied with in respect of modified product also. 2.9. The information stated in the File and Use Application regarding the modified products and riders comply with the relevant provisions of the Insurance Act 1938, the extant norms and Regulations issued by the Authority. This includes but not limited to the following: 2.9.1. IRDAI (Non Linked Insurance Products) Regulations 2019, 2.9.2. IRDAI (Unit Linked Insurance Products) Regulations 2019, 2.9.3. IRDAI (Appointed Actuary) Regulations, 2017 2.9.4. IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016 2.9.5. IRDAI (Actuarial Report and Abstract for Life Insurance Business) Regulations, 2016 2.9.6. IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002 2.9.7. IRDAI (Expenses of Management oflnsurers transacting Life Insurance Business) Regulations, 2016 2.9.8. IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016 2.9.9. IRDAI (Investment) Regulations, 2016 2.9.10. IRDAI (Protection of Policyholders' Interests) Regulations 2017 2.9.11. IRDAI (Reinsurance) Regulations, 2018 The above list is for reference purpose and shall not be considered as exhaustive. 2.10. The information stated in the different pages of File and Use Application is consistent. 2.11. The policy document, proposal form, sales literature and benefit illustration is consistent with the File and Use Application. 2.12. The insurers may simultaneously make one or more changes mentioned under para 1 above to the products and riders already approved subject to the condition that benefit structure has not changed compared with latest approved product Page 3 of 17 under File and Use procedure or last modified and approved product under File and Use procedure whichever is later. 2.13 The total changes in benefits/charges/premium rates, as applicable, shall not exceed ± 15% during any financial year excluding changes on account of changes in interest rates as mentioned under para 1.3 above. 2.14 Except the changes mentioned in para 1.3 above, there shall be a gap of at least one year from the last approval/modification of the product/rider. 2.15 Change in premium rates/charges and/or benefit amounts of the approved products and riders on account of implementation of IRDAI (Non linked Insurance Products) Regulations, 2019 and implementation of IRDAI (Unit linked Insurance Products) Regulations, 2019 shall be permitted only once during the implementation time period stipulated under circular dated 26 July, 2019 regarding implementation of IRDAI (Non Linked Insurance Products) Regulations, 2019 and IRDAI (Unit Linked Insurance Products) Regulations, 2019. 3. Specific norms to be satisfied under each modification: y In addition to generic norms stated in para 2 above, the following norms specific to each modification shall also be complied with. The norms in respect of each modification are stated below: 3.1 Change in premium rates/charges and/or benefit amounts under approved products and riders on account of implementation of IRDAI (Non linked Insurance Prod~ Regulations, 2019: 3.1.1 The change in premium rates/charges and/or benefit amounts after modification are limited to± 7.5 % of the premium rates and/or benefit amount of the already approved product and rider. 3.2 Change in premium rates/charges and/or benefit amounts under approved products and riders on account of implementation ofIRDAI (Unit Linked Insurance Products) Regulations, 2019: 3.2.1 The change in premium rates/charges and/or benefit amounts after modification are limited to± 7.5 % of the premium rates/charges and/or benefit amount of the already approved product and rider. Page 4 of 17