Below is a circular issued by IRDA on introducing insurance product sales based on Need Analysis of clients. It looks like now even IRDA is serious about graduating insurance agents into advisors and trying to do its bit. If insurance agents really follow this advisory and sales process in the right spirit and recommend the products based on life stage, need category and income level, mis-selling should come down. Do download and check out Prospect Product Matrix & Need Analysis Form from the links given in the circular.
Well it does look like mini financial planning. What say?
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
31st January, 2012
Re: Exposure Draft on Guidelines on Prospect Product Matrix for Life Insurance
On 18th June, 2010, the Authority had put up a draft in the nature of a Discussion Paper on the need to prescribe standards and procedures for Needs Analysis for sale of life insurance policies. Needs Analysis by the intermediaries and the insurance companies is necessary before effecting the sale of a life insurance policy in order to ensure that the product that is proposed to be sold is suitable for the prospect and meets his or her needs.
It is proposed to mandate carrying out Needs Analysis for life insurance policies . Insurers shall, in terms of Regulation 4 (1) of the IRDA Regulations for Protection of Policyholders’ Interests, 2002 adopt a standard Proposal cum Needs Analysis form.
It is also proposed to issue guidelines to life insurance companies to develop and implement a Prospect Product Matrix that will serve as a tool to assess whether or not the proposed sale is based on the Needs Analysis. This shall currently be made applicable to all life insurance policies (Traditional, ULIPs, Pension and Health) sold as individual policies.
The Draft Guidelines, along with an illustration of a Prospect Product Matrix (Annexure B) and the Standard Proposal cum Need Analysis Form (Annexure A) are attached. Stakeholders are requested to send in their comments on the draft guidelines as soon as possible but definitely on or before 29th February, 2012. Feedback may be sent to firstname.lastname@example.org
J. HARI NARAYAN
Network FP would like to thank Jagadish Bhat, CFP and Principal Officer at Ambit Insurance who shared this circular and documents with us.