Life insurers don’t expect aggressive pricing for standard term plans that the regulator asked them to offer as they wait to assess the risks amid limited reinsurance support, reports BloombergQuint.
The IRDAI in October directed all life insurers to launch a standard term insurance plan, Saral Jeevan Bima, effective 1 January 2021, to reduce complexity and help customers make an informed choice.
The product will have a policy term of 5-40 years. The sum assured will range from INR5000,000 ($6,800) to INR2.5m.
Mr Samit Upadhyay, CFO and head of product at Tata AIA Life Insurance, said, “Most private life insurers would have very limited data, experience in the segment that is opened up by Saral Jeevan Bima and hence it’s expected that many would approach this cautiously.
“But in the medium term, we expect stiff competition, whether using Saral Jeevan Bima or similar products, for the relatively new customer segment.”
Mr Upadhyay said given the features are mostly going to be standard, brand, ease of on-boarding customers and price will be key differentiators. “Customisation of offerings based on consumers’ needs and smart underwriting will be key to customer satisfaction and profitability.”
“Each insurer is permitted to price the product as per their mortality experience, cost base and other considerations,” Abhijit Gulanikar, president-business strategy at SBI Life, told BloombergQuint. “The pricing for this product will evolve over time as the current base of mass market pure term products is small.”