22nd June 2022
On paper, changing India’s insurance policy from ‘File and Use’ to ‘Use and File’ may just seem like mere semantics. However, in reality, this small change has big implications on the flexibility of the Indian insurance market and market growth, says GlobalData.
Ashish Raj, Insurance Analyst at GlobalData, comments “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. The new measure is expected to be a game changer in the Indian insurance industry, as it allows both health insurers and general insurers to introduce new, innovative products without administrative delays.”
Despite these relaxations, insurers are still required to ensure compliance with the prevailing legislation governing insurance products in the country. In the case of non-compliance, the regulator can direct insurers to withdraw the product from the market.
Raj continues “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 INR3.5tr($46.2bn) by 2026.”
GlobalData notes that the new ‘Use and File’ measure will allow insurers to adopt new trends and capitalise on opportunities.
Raj concludes “At the start of COVID-19 pandemic, no health insurance products covered COVID-19 infection, and these were only introduced later. 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 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.”
GlobalData Trends(138 articles)