Distracted over the misleading nature and selling of high NAV (Net Asset Value) -guaranteed life insurance products, the Insurance Regulatory and Development Authority has decided to put an end to such products. These products give an impression that returns offered are linked to market performance. At present, such products account for about 20% of life insurance sector’s new premium income. Speaking on the sidelines of a programme organised by the Institute of Insurance and Risk Management (IIRM) and ICICI Lombard in Hyderabad, J Hari Narayan, chairman, Insurance Regulatory and Development Authority, said, “The high NAV guaranteed products are discouraged in several markets since they result in an easy miscommunication... What is deemed to be highest NAV should not be confused with what is the highest index or how the market is performing. Highest NAV products tend to become debt products in order to maintain the guarantee whereas while marketing such products, the consumer is left with the feeling that it grows along with the value of the market itself. According to the IRDA chairman, total assets under management for the insurance sector, which has posted a healthy growth, is expected to touch 20 lac crore by March 2013 against 18 lac crore a year ago. “When I took charge, the total asset under management was at 8 lac crore. Last year, it was 18 lac crore... and by March it may touch 20 lac crore,” he added. Further he said the new product regime, as and when they come into force with different dates to stagger the implementation, gives time to insurance companies to readjust their processes.
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