News Regulations23 Jun 2022

India:"Use and File" product approval process deemed a game-changer

23 Jun 2022

Replacing the 'File and Use' policy -- that has caused delays to the launch of COVID-19-related product -- to one that is "Use and File" will be a game-changer in India, says data and analytics company GlobalData.

The change has big implications for the flexibility of the insurance market and market growth, says GlobalData.

Mr Ashish Raj, insurance analyst at GlobalData, said, “India’s prior ‘File and Use’ procedure, which saw insurers having to file a new product before launch, came with a hefty waiting period of four to six months or even higher.

Such a huge delay was one of the reasons that health insurers were not able to cover COVID-19 infection until late into the pandemic, for example.

Mr Raj pointed out, “At the start of the COVID-19 pandemic, no health insurance products covered COVID-19 infection."

He noted, "IRDAI launched the standard COVID-19-specific product ‘Corona Rakshak Policy’ in June 2020 and the ‘Corona Kavach Policy’ in July 2020, mandating insurers to offer these products across the board. If the now-available ‘Use and File’ policy had been used then, that delay would have been substantially reduced."

The relaxation of the product approval process, announced on 1 June 2022, applies to health and general insurance lines including fire, marine, motor, and engineering insurance. However, it is not applicable to retail products of miscellaneous general insurance lines having an initial sum insured up to INR50m ($639,000). These products will continue to adhere to the existing ‘File and Use’ procedure.

Mr Raj said, “The move to ‘Use and File’ is a win-win situation, as it will provide consumers with more choices and will improve the ease of doing business for health and general insurers. While insurers will leverage this relaxation to launch new products catering to the changing market needs, IRDAI’s role in maintaining transparency and checking potential malpractices by insurers will remain key to the success of the new ‘Use and File’ policy over the coming years.”

He added, “Not only does the new measure allow flexibility in the market, but it also maintains the necessary regulatory checks. The system will result in the availability of a wide range of products for consumers and encourage market growth. According to GlobalData, India’s general insurance industry will register a CAGR of 9.9% over 2021-2026 to reach INR3.5tn ($46bn) by 2026.”


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