CIRCULAR NO.
IRDA/ACTL/FUP/VER 2.0/ DEC 2001/
THIS
CIRCULAR IS APPLICABLE TO ALL REGISTERED LIFE INSURERS IN
1. Application.—This circular is applicable to all life
insurers carrying on life insurance business in
2. Description of File and
Use Procedure.—(1) An
insurer, who wishes to introduce a new product, shall file an
application for such product with the Authority and use the
product for sale in the market, subject to the requirements set out in para 3.
(2) An insurer, who wishes to make changes to
any existing product or to withdraw an existing product, shall conform to the
requirements set out in para 4 for changes and in para 5 for withdrawals.
(3) A
separate application shall be made in respect of each product.
3.
Procedure to be followed for introduction of new insurance products.— (1) A life insurer, wishing to introduce a new
product, shall submit an application to the Authority along with Form IRDA -
Life-Non Linked -NP .
(2) Within 30 days of the receipt of the
application referred to in sub-para (1), the
Authority may seek additional information with regard to the product, and the
insurer shall not commence selling the product in respect of which additional
information has been sought by the Authority, until the Authority confirms in
writing having noted such information. If no such information is sought by the
Authority, the insurer can commence selling the product in the market, as set
out in the application after the expiry of the said 30-day period.
4. Procedure to be followed
for changes in terms and conditions of existing products. – A life insurer, wishing to make changes to an existing product, shall
submit an application to the Authority setting out the details of the changes
in the terms and conditions and giving reasons for the proposed changes,
subject to procedure laid down in para 3.
5. Procedure to be followed
in case of withdrawal of existing products. – A life insurer, wishing to withdraw an existing product,
shall inform the Authority giving the details of the product and the reasons
for withdrawal.
N. RANGACHARI,
CHAIRMAN.
FILE & USE PROCEDURE
FORMS: IRDA-LIFE-NON-LINKED-NP
IRDA-LIFE- LINKED-NP
GENERAL INSTRUCTIONS
1.
Life Insurers must use appropriate forms for
filing the products.
Form IRDA-Life-Non-linked-NP:
non-linked business. (individual as well as group business products)
Form IRDA-Life-Linked-NP:
linked business. (individual as well as
group business products)
2.
(a)
If an insurer wishes to offer riders/add-ons along with a basic life insurance
product, he must furnish the information in respect of the riders/add-ons separately using the Form
IRDA-Life-Non-linked-NP or the Form IRDA-Life-Linked-NP, as the case may be and
also the financial projections alongwith sensitivity analysis for each
rider/add-on benefit. It is also clarified that it is not necessary to file the
rider details more than once, but it would be necessary to furnish the item
financial projections ( i.e. item no.15 of the Form), when the same rider is
offered along with other products.
Note: If an insurer offers rider A along with
product X, product Y or product Z (e.g. Accident Benefit Rider), then the Form
has to be furnished afresh along with
each of the products under which the said rider is offered. This is
because the financial projections for the rider may differ under that product.
For instance, the financial projections submitted for a riderA under the
product X need not be the same when the
same rider A is offered alongwith product Y. As such the financial projections
need to be furnished for the said rider alongwith product in the specified
Forms. It may be noted that rider details need not be mentioned again but only
the financial projections, when the same rider is offered along with the second
or the third product.
(b) Insurers should also ensure that the
minimum policy term of any product to be launched in the market shall not be
less that five years.
3.
All items in the Forms with the relevant
details must be furnished. For instance, under Item 19 of the
Form “Certification” the details such as Name of Appointed Actuary, Name of
the product, Name of Insurer etc. must be
furnished.This would avoid unnecessary delays.
4.
Forms along with the necessary
enclosures such as Specimen Policy Bond, Specimen Proposal Form, Specimen Sales
Literature, and the Statement of Financial Projections, must be furnished, but
NOT in piecemeal.
5.
Insurers must not alter the material contents of the products under the File &
Use procedure later without prior
intimation to the Authority.
6.
While submitting the Form the reference to enclosures must be
avoided as far as possible. The
permitted enclosures are:- a.) Sales Literature; b) Policy Bond; c) Proposal forms d) Financial Projections
7.
If
an insurer wishes to modify materially
an existing product which is already in use in the market, then he is required to comply with
‘File & Use’ procedure afresh, depending upon the nature of modification.
8.
If
an insurer wishes to withdraw an existing product in the market, he may do so. But he must inform the
Authority giving reasons for withdrawal,
within 7days from the date of withdrawal.
9.
If
an insurer does not receive any query (either formal or informal ) from the Authority within 30 days from the date of receipt of the application
form at the Authority, he may use the product in the market after the expiry of
30 days from the said date of filing. If
the insurer receives any query with regard
to the product filed either formally in
writing or informally from the Authority, he should not use the
product in the market unless and untill the queries are clarified to the
Authority.
10. If an insurer does not launch the product
within a reasonable period (say 3 months ), he will be required to comply with ‘File & Use’ procedure afresh.
11. The Appointed Actuary must initial on
all the pages of the application Form and the enclosures therewith.
12. The insurer shall undertake to
furnsih the premium rates in their web-site so that if any member of public is
interested to know the premium rate he can obtain the same by using the
web-site. This applies to all products whether individual or group.
13. The insurer shall also furnish the name of the
software used in the matter of designing and filing the products (for instance
the software can be AXIS, PROPHET). If the insurer is using his own software he
must inform so. This is for the information of the Authority only.
14. All the communications regarding ‘File &
Use ‘ must be addressed to the Sr.Actuary, Insurance Regulatory and Development
Authority, 1st Floor, Gate No.3, Jeevan Tara Building, Parliament Street, New Delhi-110001.
Phone No. 3743865, 3753867, 3349182; fax no.: 3363981,
e-mail:ksmanyam@irdaonline.org
1) Form IRDA–Life-Non Linked –NP
Application for ‘file and use’ of Non-Linked Life Insurance Products.
1. Name of Life Insurer: [give
the name of Insurer alongwith Registration No.alloted by IRDA]
2. Name of Appointed Actuary: [Give the name of Appointed Actuary
certifiying this product. Please note that his appointment should be in force
as on the date of this application.]
3. Brand Name of the insurance
product (market name):
[Give the name of the product which will be printed in Sales Literature and known
in the market. This name should not be changed after launching in the market.
This name shall appear in all returns etc. which would be submitted to IRDA.]
4. Date of introduction of the
product (proposed in case of new products; actual date in case of existing
products): [ In case of new products being
launched for the first time in the market, give the proposed date (However the
date cannot be within 30 days from date of this application) from which Insurer
wants to market. In case of existing products, the actual date from which
product was launched in the product.]
5. Date of change (proposed in case
of existing products, but not applicable for new products): [(a)This must be filled as “Not Applicable”
for all the new products. (b) Proposed date of modification of the features of
the product, where such product is already in use in the market. (c) In case the Insurer wishes to withdraw
the existing product from the market,
the date of withdrawal must be furnished under this item. In such
withdrawal cases, the first 5 items only need to be filled in and the application
must be signed by both the Appointed Actuary and the Principal Officer of the
Insurer.]
6. Terms and Conditions
[All the items
should be filled in properly and carefully. No item must be left blank.]
6.1 Whether the product is offered
to: [Tick the appropriate
boxes]
a) [Males] / [Females] / [Both]
b) [Smokers]/ [Non Smokers]/ [All]
c) [Individuals] / [Groups] [All]
d) [Standard Lives]/ [All types
of Lives – including impaired lives]
e) [Specific geographic locations in
[if specific geographic locations, specify
the locations.]
f) [Urban population]/ [Rural
population]/ [All]
g) [Targeted Section]/ [Socially
weaker sections] /[Any other] /[All]
h) market for:
limited period: [if
so give here the number of months]: /unlimted period.
a) Minimum Face Amount/Basic Sum
Assured/ Annuity p.a. : Rs. [
] in 000’s
b) Maximum Face Amount/Basic Sum
Assured/ Annuity p.a.: Rs. [
] in 000’s
c) Minimum / Maximum Premium : Rs .[ ] / [ ]
[State the premium charged indicating
the mode of payment of premium as well as the coverage amount]
d) Minimum Entry Age: [ ]
last /nearest / next birthday
f) Maximum Entry Age: [ ] last /nearest / next birthday
g) Minimum Policy Term:[ ] in years / months
h) Maximum Maturity Age: [ ] last /nearest / next birthday
6.3 Specify
whether terms and conditions include: [If there is restriction, the same should be furnished.]
a)
[restriction on travel outside
b)
[restriction on future occupation] / [No restrictions on future
occupation]
7. General Description of the
Product. [This section should describe the
various contingencies under which the benfits would be payable and how these
would be determined.This may look like the following table for an Endowment product where full sum
assured with vested bonuses is payable on death / maturity. Surrender value is
payable after 3 years’ premiums have been paid and which would be some
percentage of the premiums paid.]
|
Events |
How and when Benefits are payable |
Size of such benefits/policy monies |
|
Death |
Payable at the end of the year of death |
Full Sum Assured+vested bonuses |
|
Maturity |
Payable immediately on the date of
maturity |
Full Sum assured+vested bonuses |
|
Surrender |
Payable Immediately on the date of
surrender |
GSV/SSV whichever is higher (see item 8.3
) |
|
Lapse |
Payable on any of the above three events
subject to certain condition, for instance, the insurer having received at
least three years’ premiums |
Reduced benefits according to a
pre-determined formula (see item 8.3) |
Note :GSV=Guaranteed Surrender
Value, SSV=Special Surrender Value
8. Product Features.
8.1 Par(ticipating) /
Non-Par(ticipating) : [Tick the appropriate one. Please
note that the basic product and any rider attaching to the basic product should
belong to one category (i.e. either par or nor par but not both).]
8.2 Benefit payable on death or survival:- [Describe how and when benefits are payable. Specify any conditions
attached to each benefit.]
8.3 Non-forfeiture benefits (cash
surrender value, paid-up value, automatic premium loans, etc.) (Please see section 113 of the Insurance
Act,1938)
[This section should specify the benefits /provisions with respect to surrender values ,paid up
values etc. Surrender value scales should be specified in accordance with the Section-113 of the
Insurance Act,1938. Wherever a formula is used that should be specified
alongwith the assumptions made.The various non-forfeiture benefits should be
given under separate headings surrender values if any should be specified as
well. The insurer shall also file with the Authority the non-guaranteed (special)
surrender values made available to policyholders from time to time.]
8.4 If the product is with profits
product, how the profits will be distributed.[Specify whether
simple/compound reversionary bonuses,
cash bonuses, terminal bonuses,
etc.]
8.5 Options available under the product. (e.g. to increase or decrease
benefits, plan changes, conversion to
annuities at maturity, etc.) [This section should specify the
various options available under the product.The charges , if any,towards the
cost of the option should be specified. ]
8.6 Limitations
on minimum and maximum sizes : (either sum assured or premiums) [For Group products the
minimum size of the group should also be specified here.]
8.7 Policy loan provisions. [Specify whether any
loan is available on the policy or not. The scale of the loan amount available,
if any, should be specified.]
8.8 Modes of premiums permitted and the charges applied for different
modes of payment premiums and quantum of sum assured, if any. [ Specify here modes allowed, such as SP,AP, HP,QP,MP, FP; charges applied
for the selection of each mode, which might or might not depend upon the size
of the policy : FP=fortnightly premium ]
8.9 Scales of
commissions/remuneration payable to the agents/insurance intermediaries.
[This section should
specify the scales of commissions /remuneration payable to the agents/insurance
intermediaries.The Section –40(B) of the insurance Act,1938 should be referred
to for ascertaining the various limits on commssions/remunerations payable to
agents/insurance intermediaries.]
8.10
Any other features that may be relevant for the
product.(specify here riders/add-on benefits)
[This section should specify the names
of the rider(s)/add-on benefits which are proposed to be attached with the
basic product.The riders to be attached should not be furnished as a group. For
instance if various Term riders are to be attached then the names of each of
the rider has to be mentioned.Please follow general instructions for filing of
rider(s)/add-ons.]
9. Target Market . [This section should discuss the target market for which the product is
designed. Also please enclose a separate statement, if any market research is
conducted for this purpose .]
10. Distribution Channels. [This section should
describe the various distribution channels to be used for distributing the
product. If multiple channels are to be used, the expected proportions of
business to be procured by each channel
should be indicated .]
11. Treatment of Different Classes
for the purpose of underwriting. [This section should discuss how the different segments of the population
will be dealt with for the purpose of underwriting (to the extent they are
relevant and a brief detail of procedure adopted for assessment of various risk classes may be given.) ] e.g.
a)
Males and females.
b)
Smokers / non-smokers
c) Limitations on entry ages
d) Sub-standard lives.
e)
Any other classifications that may be relevant to the
product line (such as group of lives)
12. General Policy Provisions. [ This section should give information on the following: For the basic
cover, there should not be any ‘exclusion’ provision, except the ‘suicide’
clause. However, ‘exclusions’ may be imposed for the rider benefits.]
a) Suicide Claim provisions. [The amount of claim payment,if any. to be made on suicide should be speicified
here.The suicide exclusion provision should be clearly spelt out here.]
b)
Exclusions, if any (e.g. occupational hazard ,travel)
c)
Grace period for non-forfeiture provisions
d)
Nomination requirements. (please see section 39 of the
Insurance Act, 1938)
f) General approach to be used
for revivals or reinstatements, policy changes/alterations, etc.
13. Reinsurance.
[This section should describe the
reinsurance arrangements. The retention limit should be indicated. The name of
the reinsurer and the terms of reinsurance (premium rates, commissions, etc.).
Any recapture provisions should be described.
Please enclose a copy of the reinsurance program and a copy of the
Treaty, if not filed with the Authority.]
FINANCIAL PROJECTIONS
14. Pricing Assumptions. The pricing assumptions will depend on the
nature of product. Give details of the following (Also, give the actuarial
formulae, if any, used; if not, state how premiums are arrived at):
a)
Rate of mortality [The tables used must be
prescribed one. Please get in touch with Actuarial Society of
b) Rates of morbidity [The tables used must be prescribed one. Please get in touch with
Actuarial Society of
c) Rates of policy terminations.
[The rates used must be in accordance with insurer’s
experience, if such experience is not available, this can be from the
industry/reinsurer’s experience .]
d) Rate of interest. [The rate or rates must be consistent with the investment
policy of the insurer.]
e) Bonus rates (bonus loadings
assumptions in case of par policies)
f) Guaranteed cash values. [These are guaranteed surrender values, as mentioned elsewhere in this
form.]
g) Commission scales (split
according to distribution channels). [Give rates of commission. These are explicit items.]
h) Expenses:
I) First year expenses by : sum assured related, premium related, per
policy related
II) Renewal expenses (including overhead expenses) by : sum assured
related, premium related, per policy related
III) Claim expenses
(The
expenses should include a provision for future inflationary increases)
i)
Allowance for transfers to shareholder, if any: [Please see section 49 of the Insurance Act, 1938]
j) Taxation. [Please see the relevant sections of the Income Tax
Act, 1961]
k) Profit margins. [The profit
margins should be shown for various
model points for base,optimistic and pessimistic scenarios in a tabular format, as in item 15 below. The
definition of profit margin should also be give, for insurance the present
value of net profits to the p.v of premiums.]
l) Volume of new business (By distribution
channels, give expected premium income for the next 5 years .)
m) Average sum assured (by distribution channels) .
n) Any other parameter assumed relevant for the product.
15. Results of Financial
Projections. [The
financial projections should show the following ,for each model point(age and
term combination). The insurer should indicate the model points such as
entry ages 20, 30, 40, 50, 60 and terms, say 10, 20, 30, depending upon the
product]
|
Entry Age (20,30,40,50,60) |
Policy Term, if any (e.g. 10,20,30) |
Profit Margin (base scenario) |
Profit Margin (optimistic scenario) |
Profit Margin (pessimistic scenario) |
|
|
|
|
|
|
a)
New business strain in each of the projection years for
the next 5 years.
b) ROI on the product (ROI :Return
on Investment ) (or profit margin,giving basis)
[The
definition of the return of investment and how it has been calculated should be
furnished.]
c) Profit test conducted, if any : [The results of the profit test
conducted should be given in tabular
form with the basis for calculations clearly spelt out. ]
d) Sensitivity Analysis . [The assumptions and results of such an analysis should
be furnished if possible in a tabular format. ]
16. Proposal Form and Sales
Literature: [Proposal form
required to be filled in by the proponent to purchase the insurance product.
Sales Literatures – the pamphlets made available to members of the public at
the time of sale). While designing the proposal form, please that the
provisions containted in the Insurance Act, 1938 are complied with. For
instance, Section 41..
Sales Literature: This is the
literature which is to be used by the various distribution channels for selling the produc in the market. This
should enumerate all the salient features of the product alongwith the
exclusions applicable for the basic
benefits..The exclusions for riders attached should also be furnished. A sample
benefit illustration should be furnished.]
Enclose a specimen copy of the
proposal form alongwith the sales literature made available providing
information to the prospects.
17. Policy Bond. [insurance
contract].: [Enclose a
specimen copy of the policy bond to be issued to the purchaser of the insurance
product.]
18. Premium Table (including Rider
Premium Tables): [Enclose
a copy of the premium table to be used by the distribution channels. Please
write the name of the website (of the insurer) on which the premium rates would
be made available. See the General Instructions.]
19. Certification. The
Insurer shall enclose a certificate from the Appointed Actuary, countersigned
by the principal officer of the insurer,
as per specimen given below:
(The language of this should not
be altered at all)
" I, (name
of the appointed actuary), the appointed actuary of the life insurer: (name), hereby solemnly declare that the
information furnished above is true and
certify that, in my opinion, the premium rates, advantages, terms and
conditions of the product (market name
of the product), *which is a new insurance product to be launched in the
market/*which is an existing product but being modified now, are workable and sound, the assumptions are
reasonable and premium rates are fair."
*=strike off whichever is not applicable
Place Name and
Signature of the Appointed Actuary.
Date:
Counter Signature of the principal officer
along with name, and Company’s seal.
2) Form IRDA–Life- Linked –NP
Application for ‘file and use’ of Linked Life Insurance Products.
1. Name of Life Insurer: [give the name of Insurer alongwith Registration
No.alloted by IRDA]
2. Name of Appointed Actuary: [Give the name of Appointed Actuary
certifiying this product. Please note that his appointment should be in force
as on the date of this application.]
3.
Brand Name of the insurance product (market
name): [Give the name of the product
which will be printed in Sales
Literature and known in the market. This name should not be changed afterwards.
This name shall appear in all returns etc. which would be submitted to IRDA.]
4. Date of introduction of the
product (proposed in case of new products; actual date in case of existing
products): [ In case of new products
being launched for the first time in the market, give the date (However the
date cannot be within 30 days from date of this application) from which Insurer
wants to market. In case of existing products, the actual date from which
product was launched in the product.]
5. Date of change (proposed in
case of existing products, but not applicable for new products): [(a)This must
be filled as “Not Applicable” for all the new products. (b) Proposed date of
modification of the features of the product, where such product is already in
use in the market. (c) In case the Insurer
wishes to withdraw the existing product from the market, the date of withdrawal must be furnished
under this item. In such withdrawal cases, the first 5 items only need to be
filled in and the application must be signed by both the Appointed Actuary and
the Principal Officer of the Insurer.]
6. Terms and Conditions. [All
the items should be filled in properly and carefully. No item must be left
blank.]
6.1 Whether the product is offered to: [Tick the appropriate boxes]
a)
[Males] / [Females] / [Both]
b) [Smokers] / [Non Smokers]/ [All]
c) [Individuals] / [Groups] [All]
d) [Standard Lives]/ [All types of Lives – including impaired lives]
e) [Specific geographic locations in
[if specific geographic locations, specify
the locations.]
f) [Urban population]/ [Rural population]/ [All]
g) [Targeted Section]/ [Socially weaker sections] /[Any other] /[All]
h) market for:
limited period: [if so give here the number of months]: /unlimted period.
a)
Minimum Face Amount/Basic Sum Assured/ Annuity p.a. : Rs. [ ] in 000’s
b)
Maximum Face Amount/Basic Sum Assured/ Annuity p.a.: Rs. [ ] in 000’s
c)
Minimum / Maximum Premium : Rs .[ ] / [ ]
[State the premium charged indicating the
mode of payment of premium as well as the coverage amount]
d)
Minimum Entry Age: [
] last /nearest / next birthday
f)
Maximum Entry Age: [ ] last
/nearest / next birthday
g)
Minimum Policy Term:[ ] in
years / months
h)
Maximum Maturity Age: [ ]
last /nearest / next birthday
6.3 Specify
whether terms and conditions include:
[If there is restriction, the same should be furnished.]
a)
[restriction on travel outside
b)
[restriction on future occupation] / [No restrictions on future
occupation]
7. General Description of the Product. [This section should describe the various
contingencies under which the benfits (including method of calculation of unit
values)would be payable and how these would be determined.
8.
Product Features.
8.1
Investment Policy (give
here for each type of segregated funds)
8.2 Benefit payable on death or survival:- [describe how and when benefits are
payable. Specify any conditions attached to each benefit]
8.3
Non-forfeiture benefits
(cash surrender value, paid-up value, automatic premium loans, etc.) (Please see section 113 of the Insurance
Act,1938)
[This section should specify the benefits /provisions with respect to surrender values ,paid up
values etc. Surrender value scales should be specified in accordance with the Section-113 of the
Insurance Act,1938. Wherever a formula is used that should be specified alongwith
the assumptions made.The various non-forfeiture benefits should be given under
separate headings surrender values if any should be specified as well. The
insurer shall also file with the Authority the non-guaranteed (special)
surrender values made available to policyholders from time to time.]
8.4 Options available under the product. (e.g. to increase or decrease benefits,
plan changes, switching, flexibility in payment of premium, premium
holidays,conversion to annuities at
maturity, etc.) [This section should specify the various options available
under the product.The charges , if any,towards the cost of the option should be
specified. ]
8.5 Charges and frequency of charges ( Specify here all charges such as
switching charge)
8.6 Minimum Guarantees available (e.g. Benefits, cash surrender values, paid
up value, charges etc.)
8.7 Limitations
on minimum and maximum sizes :
(either sum assured or premiums) [For Group products the minimum size of the
group should also be specified here.]
8.8
Policy loan provisions.
[specify whether any loan is available on the policy or not. The scale of the
loan amount available, if any, should be specified.]
8.9 Unit encashment conditions:
8.10 Modes of premiums permitted and the
charges applied for different modes of payment premiums and quantum of sum
assured, if any. [specify here
modes allowed, such as SP,AP, HP,QP,MP, FP; charges applied for the selection
of each mode, which might or might not depend upon the size of the policy]
8.11
Scales of commissions/remuneration payable to the agents/insurance
intermediaries.
[This section should specify the scales of
commissions /remuneration payable to the agents/insurance intermediaries.The
Section –40(B) of the insurance Act,1938 should be referred to for ascertaining
the various limits on commssions/remunerations payable to agents/insurance
intermediaries.]
8.12
Any other features that may be relevant for the product.(specify here riders/add-on benefits)
[This section should specify the names of
the rider(s)/add-on benefits which are proposed to be attached with the basic
product.The riders to be attached should not be furnished as a group. For
instance if various Term riders are to be attached then the names of each of
the rider has to be mentioned.Please follow general instructions for filing of
rider(s)/add-ons.]
9. Target Market . [This section should discuss the target market for which the product
is designed. Also please enclose a separate statement, if any market research
is conducted for this purpose]
10. Distribution Channels.
[This section should describe the various distribution channels to be
used for distributing the product. If multiple channels are to be used, the
expected proportions of business to be
procured by each channel should be indicated.]
11. Treatment of Different Classes for the
purpose of underwriting. [This section should discuss how the
different segments of the population will be dealt with for the purpose of
underwriting (to the extent they are relevant and a brief detail
of procedure adopted for assessment
of various risk classes may be given.)]
e.g.
a) Males
and females.
b) Smokers
/ non-smokers
c)
Limitations on entry ages
d)
Sub-standard lives.
e) Any
other classifications that may be relevant to the product line (such as group of lives)
12. General Policy Provisions.
This section should give information on the following: [For the basic cover,
there should not be any ‘exclusion’ provision, except the ‘suicide’ clause.
However, ‘exclusions’ may be imposed for the rider benefits.]
a)
Suicide Claim provisions. [The
amount of claim payment,if
any. to be made on suicide should be
speicified here.The suicide exclusion provision should be clearly spelt out
here.]
b) Exclusions,
if any (e.g. occupational hazard ,travel):
c) Grace
period for non-forfeiture provisions:
d) Nomination
requirements. (please see section
39 of the Insurance Act, 1938)
f)
General approach to be used for revivals or reinstatements, policy
changes/alterations, etc.
13.
Reinsurance. [This section should describe the reinsurance
arrangements. The retention limit should be indicated. The name of the
reinsurer and the terms of reinsurance (premium rates, commissions, etc.). Any
recapture provisions should be described.
Please enclose a copy of the reinsurance program and a copy of the
Treaty, if not filed with the Authority.]
Financial Projections
14. Pricing
Assumptions
The pricing
assumptions will depend on the nature of product. Give details of the following
(Also, give the actuarial formulae, if any, used; if not, state how premiums
are arrived at):
a) Rate of mortality:
b) Rates of morbidity:
c) Rates of policy
terminations:
d) Rate of interest assumed
on non-unit reserves:
e) Guaranteed cash values:
f) Commission scales (split according to
distribution channels):
g) Expenses:
I)First year expenses by : sum assured related,
premium related, per policy related:
II)Renewal expenses (including overhead expenses) by
: sum assured related, premium related, per policy related
h) Mortality/Morbidity Charge:
i) Allocation rate:
j) Bid/Offer spread:
k) Fund Mnagement Charge :
l) Surrender penalty:
m) Claim expenses:
(The expenses
should include a provision for future inflationary increases)
n) Allowance for transfers to
shareholder.
o) Taxation:
p) Profit margins:
[The profit margins should
be shown for various model points
for base,optimistic and pessimistic scenarios in a tabular format.The definition of profit
margin should also be given.]
q) Volume of
new business: (by
distribution channels, give expected premium income for the next 5 years)
r) Average
sum assured (by distribution channels) .
s) Assumption on valuation of unit and non unit reserves
t) Any other parameter assumed
relevant for the product(such as guaranteed benefits/charges)
15. Results of
Financial Projections. [The financial projections
should show the following ,for each model point(age and term combination). The
insurer should indicate the model points such as entry ages 20, 30, 40, 50, 60
and terms, say 10, 20, 30, depending upon the product]
(a) New business strain in each of the
projection years for the next 5 years:
b) ROI on the product (ROI :Return on Investment )
(or profit margin,giving basis) [The definition of the return of investment and how it has been
calculated should be furnished.]
c) Profit test conducted, if any : [The results of the profit test
conducted should be given in tabular
form with the basis for calculations clearly spelt out.]
d) Sensitivity Analysis . [The assumptions and results of such an analysis should be
furnished if possible in a tabular format. ]
16. Proposal
Form and Sales Literature: [Proposal
form required to be filled in by the proponent to purchase the insurance
product. Sales Literatures – the pamphlets made available to members of the
public at the time of sale). While designing the proposal form, please ensure
that the provisions containted in the Insurance Act, 1938 are complied with. For
instance, Section 41..
Sales Literature:
This is the literature which is to be
used by the various distribution channels
for selling the produc in the market. This should enumerate all the salient features of the product alongwith the
exclusions applicable for the basic
benefits..The exclusions for riders attached should also be furnished. A sample
benefit illustration should be furnished.]
Enclose a
specimen copy of the proposal form alongwith the sales literature made
available providing information to the prospects.
17. Policy
Bond. [insurance contract].: [Enclose
a specimen copy of the policy bond to be issued to the purchaser of the
insurance product.]
18. Premium
Table (including Rider Premium Tables): [Enclose a copy of the premium table to be used by the distribution
channels. Please write the name of the website (of the insurer) on which the
premium rates would be made available. See the General Instructions.]
19.
Certification. The Insurer shall enclose a certificate from the Appointed Actuary,
countersigned by the principal officer of the insurer, as per specimen given below:
(The language
of this should not be altered at all)
" I, (name
of the appointed actuary), the appointed actuary of the life insurer: (name), hereby solemnly declare that the
information furnished in the IRDA/Form – Life-Linked -NP dated (date), is true and certify that, in my
opinion, the premium rates, advantages, terms and conditions of the product (market name of the product), which is a
new insurance product to be launched in the market, are workable and sound, the
assumptions are reasonable and premium rates are fair."
Name and
Signature of the appointed actuary.
Place
Date:
Counter
Signature of the principal officer along
with name, and Company’s seal.