Pulling up insurers for lack of consistency in pricing critical illness products, the insurance regulator IRDA has directed insurance companies to stick to one standard data and eventually build a database of incidence of diseases and death rates.
Life insurers are presently using critical illness rates provided by reinsurers based on the experience of developed countries with slight adjustments as there is no benchmark 'morbidity table' available in India.
"In this process, consistency was lacking with attendant issues like rationale for adjustments made and linkages to underwriting standards not being clear," the Insurance Regulatory and Development Authority said in a circular to life insurers.
IRDA referred the issue to the Actuarial Society of India to examine and recommend 'reference tables' which can serve as standard reference until a morbidity table based on Indian experience is drawn up.
ASI, in turn, has proposed a standard reference for critical illness rates for pricing and valuing liabilities for insuring dreaded diseases.
IRDA has insisted that all insurers follow this table and price their products accordingly so that the inconsistencies are avoided.
Moreover, IRDA said: "It is necessary to develop in course of time a table of rates based on Indian experience."
The regulator asked insurers to maintain data of policies and claims experience on a continuous basis, analyse them and furnish them to the authority.
"Steps may be taken to compile data in suitable format and make it available for preparing industry experience table," IRDA said.
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