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Insurance plans to get automatic clearance route

Insurance plans to get automatic clearance route

Insurance regulator IRDA will come out with a new policy to accord automatic clearance to the standard life insurance products and relax investment guidelines to encourage fund flow into infrastructure sector.

Insurance regulator IRDA will come out with a new policy to accord automatic clearance to the standard life insurance products and relax investment guidelines to encourage fund flow into infrastructure sector.

"Use and File system may be introduced. IRDA, in consultation with insurers, will identify or design certain standard products which can be used by the industry under Use and File system, if the insurance company complies with the conditions attached to the standard product," Finance Minister P Chidambaram said on Monday.

He was briefing reporters on decisions taken to give a fillip to the life insurance industry.

At present, IRDA approves all insurance products on File and Use basis which means that insurance companies can sell the product only after getting approval from the insurance regulator.

Chidambaram had earlier this month met the heads of life insurance companies and IRDA chairman J Hari Narayan to work out steps to boost the insurance sector.

He said in a country with low spread and penetration of life insurance, the objective should be to sell simple and easily understood products.

Such products will automatically be deemed to have been approved after 15 days of its intimation to IRDA unless it finds non-compliance within that period, he said.

IRDA shall take necessary action against the company in case any violations are noticed, Chidambaram said, adding, the regulator should expand such list of standard products on a continual basis.

In order to encourage investments in infrastructure sector, he said, IRDA will allow investments in an infrastructure SPV floated by any company.

Under this, the SPV should be a wholly-owned subsidiary of the parent company and the debt instrument issued by the SPV is guaranteed by the parent company, having due regard to rating criteria.