The regulator had on 4 January changed two aspects of policies sold under the Standard Fire and Special Perils (SFSP) category and asked insurers to introduce standard products based on the new guidelines
Insurers and their industry body, the General Insurance Council, have sought guidance from the Insurance Regulatory and Development Authority of India (Irdai) on products they can continue to sell, discontinue or refile under home insurance category.
This comes against the backdrop of confusion among general insurers as a result of the latest guidelines mandating a standard product covering fire and other risks.
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The regulator had on 4 January changed two aspects of policies sold under the Standard Fire and Special Perils (SFSP) category and asked insurers to introduce standard products based on the new guidelines.
The regulator also said it will stop notifying reference rates or tariffs for SFSP policies, and insurers could set premiums based on their own risk assessment.
Insurers no longer need to wait for these rates when they issue policies to individuals or micro, small, and medium enterprises (MSME) covering a house, building, or structures against fire and other natural calamities under the SFSP category.
With the rates thus “de-tariffed", the Irdai issued new SFSP regulations and asked insurers to launch standard products based on them.
“Products sold under the old regime of SFSP will be discontinued from 1 April, as the regulations have changed. Insurers will need to file home insurance plans based on the new regulations," said Sanjay Datta, chief, underwriting, claims, and reinsurance, ICICI Lombard General Insurance.
The changes apply only to new policies. Existing customers and their policies will continue based on the old terms and conditions.
Indian insurers sell three types of home insurance. The first is a simple householder’s policy under SFSP. The second is an all-risk policy covering fire, other perils, and contents of the house. SFSP covers only specified risks, but this plan offers protection against more perils such as terrorism. The third is the packaged policy, where two or more different products are combined and sold as one policy. A packaged plan may cover a structure against fire and other perils and also provide personal accident coverage.
Most insurers said they need to discontinue SFSP products and offer the new standard policy. However, they differ on the other two categories, all-risk and packaged plans. Some said that they would need to discontinue all-risk as well as packaged plans. Others said insurers would need to revise or re-file the products that were filed under SFSP. All-risk policies were not under tariff and insurers will continue to offer them, Datta said.