The Indian Insurance regulator IRDA (Insurance Regulatory and Development Authority)has asked life insurers to stop selling highest NAV (net asset value ) guaranteed products.
The Highest NAV guaranteed products are those that promise to pay the highest value the fund achieves during a certain period, say, 5 or 7 years.
IRDA,in the past 8 months, had informally expressed its discomfiture with such products by arguing that these led to systemic risks associated with the way funds were managed & posed the risk of a heavy sell - off in equities when stock markets fell. These products contribute about 20 % to 30% the total premium collection of life insurers.
In another move, IRDA has mandated a minimum death benefit of at least ten times the annualised premiums.
First Published 2012
The Highest NAV guaranteed products are those that promise to pay the highest value the fund achieves during a certain period, say, 5 or 7 years.
IRDA,in the past 8 months, had informally expressed its discomfiture with such products by arguing that these led to systemic risks associated with the way funds were managed & posed the risk of a heavy sell - off in equities when stock markets fell. These products contribute about 20 % to 30% the total premium collection of life insurers.
In another move, IRDA has mandated a minimum death benefit of at least ten times the annualised premiums.
First Published 2012
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