IRDA has come out with a circular on 24 March 2008 reducing the solvency margin on pure risk insurance policies, popularly known as term insurance. The pure term insurance policies would attract lower solvency margin now. Solvency margin is similar to the capital adequacy ratio which are being maintained by banks.
The additional capital freed up by the reduction in solvency margin should help insurance companies to price the pure risk cover cheaper and take it to the various segments of the public.
We expect that the term insurance policies would become cheaper in the months to come. The insurance companies may take a month to implement the new lower premiums due to operational constraints. Good news for the public as well as for the insurance companies!!
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2 comments:
Will the premium for existing policy come down?
Hi Satish,
We don't think the premium on the existing policy would come down. The reduction in premium would have only prospective effect.
Regards
Ideas2Wealth Team
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