The re
gulator and the committee of actuaries are of the opinion that though there are no technical problems, yet the products are too complicated, transparency is low, and the consumers are not aware of the risk associated with such products. The sub-prime crisis has revealed the pitfalls in dealing with complex financial instruments and thus the efforts to protect retail policyholders from their own folly is not at all misplaced. But the truth is that even this belated jumpstart attitude of IRDA is clearly a ploy to hide the fact that most hilariously, the same products were approved by IRDA itself. Considering the fact that most people fail to differentiate between insurance and investment-linked insurance, comprehending the intricacies of complex structured insurance products is certainly a distant dream; in such a scenario, IRDA’s post-haste decision is really up for cutting acidic criticism. The regulator on a defensive mode argues that until and unless a product is marketed, one can’t realise the loopholes and hence no corrective measures can be undertaken. That’s quite a ludicrous argument from India’s top regulator justifying its slow moves. We’re left wondering what other ‘tests’ are being currently conducted by IRDA on the unsuspecting Indian retail public.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
gulator and the committee of actuaries are of the opinion that though there are no technical problems, yet the products are too complicated, transparency is low, and the consumers are not aware of the risk associated with such products. The sub-prime crisis has revealed the pitfalls in dealing with complex financial instruments and thus the efforts to protect retail policyholders from their own folly is not at all misplaced. But the truth is that even this belated jumpstart attitude of IRDA is clearly a ploy to hide the fact that most hilariously, the same products were approved by IRDA itself. Considering the fact that most people fail to differentiate between insurance and investment-linked insurance, comprehending the intricacies of complex structured insurance products is certainly a distant dream; in such a scenario, IRDA’s post-haste decision is really up for cutting acidic criticism. The regulator on a defensive mode argues that until and unless a product is marketed, one can’t realise the loopholes and hence no corrective measures can be undertaken. That’s quite a ludicrous argument from India’s top regulator justifying its slow moves. We’re left wondering what other ‘tests’ are being currently conducted by IRDA on the unsuspecting Indian retail public.For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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