India: IRDAI working group recommends return of index-linked insurance plans
Source: Asia Insurance Review | Mar 2021
A working group appointed by the Insurance Regulatory and Development Authority of India (IRDAI) has recommended the re-introduction of index-linked insurance products (ILIPs), saying in its report that such an alternative category of products is relevant as fits in between traditional products and unit-linked products, where investment risks are completely borne by policyholders.
An ILIP is an insurance product where the returns are linked to benchmark indices. The view of the working group is that ILIPs could be a suite of products with greater transparency with respect to product structure and benefits and where risks are in line with the choice made by the customers.
In 2013, the insurance regulator barred insurers from selling ILIPs. One reason for the curb was that insurers had been aggressive in selling such products, with some sales personnel touting them as traditional savings plans.
The IRDAI is seeking feedback on the various recommendations made by the working group, with submissions to be sent in by 8 March. A