The insurance regulator has decided to put an end to high NAV (net asset value) guaranteed life insurance products, due to misleading nature.

J. Hari Narayan, chairman of the Insurance Regulatory & Development Authority, said that the highest NAV guaranteed life insurance products easily mislead consumers into what they are buying. He admitted that there is a communication problem inherent in the nature of such products.

Mr. Narayan was speaking to reporters in Hyderabad yesterday on the sidelines of an even organized by ICICI Lombard General Insurance and Institute of Insurance & Risk Management.

Speaking on the topic, he said, "What is deemed to be highest NAV should not be confused with what the highest index is or how the market is performing. Highest NAV products tend to become debt products in order to maintain the guarantee."

An analyst with a Mumbai-based brokerage, speaking on the condition of anonymity, said that the life insurers had started concentrating on NAV guaranteed products after the insurance regulator put restrictions on the sale of unit-linked insurance plans (ULIP) in September 2010.

As per some estimates, the NAV guaranteed products currently account for around 20 per cent of life insurance sector's total new premium income.

On the outlook for the India's insurance industry, Mr. Narayan said that the life insurance sector could see flat growth in the current fiscal, while the general insurance sector would enjoy better-than-expected growth of at least 18 per cent.