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Chennai:
The Insurance Regulatory and Development Authority (IRDA)
has notified a new mortality and morbidity table to
be used by domestic life insurers as the reference point
for pricing and valuation of liabilities of critical
illness stand alone products and critical illness riders.
According
to IRDA's Assets, Liabilities and Solvency margin of
Insurers Regulations, Mortality / morbidity rates used
by insurers should be with reference to a published
table that is available to the industry.
Alternatively
a life insurance company can have its own table based
on its experience provided it is made available to the
industry through the Actuarial Society of India (ASI)
and IRDA.
Ever
since the liberalisation of the life insurance industry,
the private life insurers are using the government-owned
Life Insurance Corporation of India's (LIC) mortality
and morbidity table to price their products.
However,
as there was no benchmark table for pricing or valuing
the liabilities of critical illness policies and rider
covers, they used the tables provided by foreign reinsurers,
though found lacking in consistency.
ASI,
upon a reference by IRDA on this subject, has now suggested
a standard reference critical illness rate table. Curiously,
this table is not based on the Indian experience.
In
order to construct a table based on the Indian experience
IRDA has asked all the life insurers to maintain data
of policies and claims experience on a continuous basis
and submit their analysis.
According
to industry sources, LIC is capable of developing a
table based on the Indian experience in a year's time
— provided it puts its mind to.
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