The Insurance Regulatory and Authority of India (IRDAI) on Tuesday expanded the scope of the current 'use and file' procedure, while allowing insurance companies to launch Unit Linked Insurance Plans (ULIPs) and combi plans (combination of life and health insurance plans) without seeking prior approval from the regulator. The recent changes aim to facilitate the insurance industry in promoting insurance penetration.

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The 'use and file' procedure allows an insurer to launch a product first and then file its details with the regulator. This is applicable to all health insurance products, life insurance products and almost all general insurance products.

"Under para No. 10.4 of Section B of Chapter I, individual and group unit-linked life and health insurance products are now included. This change will allow life insurers to use and file these products under the revised procedure. Additionally, a new para 10.10 has been added after para 10.9 of Section B of Chapter I, introducing the concept of 'combi products'. Combi products refer to insurance products where a life insurer acts as the lead insurer. Life insurers offering combi products must comply with the extant norms prescribed by IRDAI," the regulator said in a notification.

The regulator has also removed the segregated fund identification number (SFIN) clearance process, hence reducing the administrative hurdles for insurers and resulting in smoother and faster product launches. However, it said that life insurance companies will have to adhere to other prudential and exposure norms under the IRDAI (Investment) Regulations, 2016 for each ULIP segregated fund as well as ULIP AUM.

Further, IRDAI has permitted the addition of new unit-linked funds to existing products, while expanding the investment choices for customers.

Experts say that this move will promote incremental innovation. The 'use and file' process helps insurers to file and take products to market quickly, thus promoting faster innovation.

In 2021, IRDAI extended the 'use and file' process to all health and general insurance products. The regulator had, however, said that it would take action against any insurer found to be non-compliant with the procedure. In such cases, the authority may take one or more of the following actions.

a. Direct the insurer to withdraw the product.

b. Withdraw the '"use and file" facility for such insurer for a period as may be determined.

These norms are applicable in respect of products filed from April 1, 2021, onwards.