Insurance product labelling
The motor insurance policy is the only widely available policy which caters to both retail and institutional needs
After the success of product labelling in mutual funds, the insurance regulator has asked non-life insurers to classify their products. According to an IRDAI circular; “The general insurance products shall be classified into two broad classifications: retail products and commercial products. Both of these classifications are based on ‘who buys the product’.”
The product labelling exercise, expected to become effective from October 1, 2017, will ensure that policyholder interests are taken care of with every product that is launched. Currently, insurers can apply file-and-use principle with retail products.
At present, the motor insurance policy is the only widely available policy which caters to both retail and institutional needs. To make sure the policies that are suitable to both types of policyholders, the product labelling would avoid any confusion of possible mis-selling.
This is a very important move in the general insurance space, where differentiation and unique product attributes can be explained and communicated to target them better for respective customers.