IRDA Watches Insurers Business Practices
In a move that can impact the premium rates of the unit-linked insurance products, the Insurance Regulatory and Development Authority (IRDA) has said second year premiums should not be less than 75 per cent of the initial year’s premium.
“IRDA has noticed that the first-year premium payment is very high compared with very low premium paid by the policyholders from second year onwards,” the insurance regulator observed in a circular sent to the life insurance companies on Monday.
The insurers who had offered more than 25 per cent reduction in premium over the first year’s premium should treat the difference in premium as a single premium, the circular said.
The tightening of the premium norms would prevent companies from bringing down premium significantly from the second year onwards, said an official of IRDA.
