The current year (2010) will see country's insurance regulator, Insurance Regulatory and Development Authority (IRDA), growing up and concentrating on how to offer up utmost benefits to the average policyholder.

IRDA had a big year in 2009, coming out with various rules such as:

- the cap on charges imposed by companies on their ULIP,
- the solvency margin they ought to maintain,
- payment made to intermediaries,
- business governance,
- public revelation, and
- letting health plus life insurance plans.

During the existing fiscal, the primary objective projected is to refine the game changing rule, which capped the charges imposed by the insurance companies on their ULIPs to make it applicable for most of the policyholders.

Mr G..N. Agarwal, appointed actuary of Future Generali India Life, stated, “In addition, guidelines for aligning financial reporting with IFRS (International Financial Reporting Standards), risk based capital, calculation embedded value (current value of the future profits) and corporate governance are expected this year.”

An upper-level executive of a private life insurer told, "This year IRDA is expected to drive the focus on customer value tweaking the cap on charges regulation."

IRDA will also take a tough stand against the growth of the insurers' kitty when a customer is forced to give up his plan, he said.

R. Krishnamurthy, MD of global consultancy firm Towers Watson's insurance and financial services division, said, "We can expect IRDA to play an activist role in 2010. The IRDA and SEBI (Securities and Exchange Board of India) are likely to work out joint initiatives to control the mindless growth of ULIPs and demand more accountability from the players."

In July 2009, IRDA was forced to come forward with a guideline for capping off the charges on ULIPs owing to SEBI abolishing the entry load on mutual funds. The pension watchdog revealed the new pension plan with very low fund management charges.

"However, life insurers have come around the regulation by offering the benefit only to policies that are held to maturity. Considering the fact that majority of the ULIPs are unlikely to be held till maturity, policyholders will not see any improvement in their value proposition," an industry official said.

Expense ratio as well as persistency of the plans is yet another matter, which IRDA is likely to concentrate on this year, industry officials said.

Malay Ghosh, president of Reliance Life, told, “As the life insurance industry enters a new decade, I think IRDA will lay emphasis on expense and persistency management as the key drivers of profitability."

Private life insurers go through a bad persistency/renewal ratio with 25% of plans falling back. This signals large mis-selling by agents and also points to the overstepping limits on management costs established by the Insurance Act. (With Input from Agencies)