annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10prevailing as on the last working day of June, September, December and March of the precedingyear. Thus, the guaranteed interest rate has been stipulated to be subject to a maximum of 6 percent per annum and a minimum of 3 per cent per annum.i. In the case of unit linked pension / annuity products, no partial withdrawal is allowed during theaccumulation phase. The insurance company is required to convert the accumulated fund valueinto an annuity at the vesting date. However, the insured has an option to commute upto amaximum of one-third of the accumulated value as lump sum at the time of vesting. In the caseof a surrender, only a maximum of one-third of the surrender value can be commuted after thelock-in period. The remaining amount must be used to purchase an annuity, subject to theprovisions of Section 4 of the Insurance Act, 1938.j. The IRDA has prescribed a cap on charges in case of Unit Linked contracts (i) with a tenor of 10years or less; and (ii) for those with tenure of above 10 years. However, taking into account thediscontinuance/lapsation/surrender behaviour and with a view to smoothening the cap on charges,the following limits have been prescribed which are applicable from the 5 th policy anniversary:Number of yearsMaximum reduction in yieldelapsed since inception (Difference between Gross and Net Yield (% per annum))5 4.006 3.757 3.508 3.309 3.1510 3.0011 and 12 2.7513 and 14 2.5015 and thereafter 2.25k. As per the stipulations, the net reduction in yield for policies with term less than or equal to 10years shall not be more than 3.00 per cent at maturity. For policies with term above 10 years, thenet reduction in yield at maturity shall not be more than 2.25 per cent.l. The maximum loan amount that can be sanctioned under any ULIP policy shall not exceed 40per cent of the surrender value in those policies where equity accounts for more than 60 per centof the total value of investment and shall not exceed 50 per cent of the surrender value of thosepolicies where debt instruments accounts for more than 60 per cent of the total value of investment.Consumer Education:I.4.1.5 Consumer education and policyholderprotection being two sides of the same coin, theRegulator has an onerous responsibility towardsconsumer education as it has for policyholderprotection. In fact, Consumer Education is a part andparcel of Policyholder Protection. Towards this end,IRDA has, over the years taken several initiativesthrough various media print, television and radio.I.4.1.6 IRDA also encourages and supports consumerbodies to conduct seminars on insurance, therebynot only educating the consumer but also providing aplatform for the consumer to interact with itsrepresentative(s) who, it makes sure, participate insuch seminars.I.4.1.7 The IRDA itself conducts/participates in andsupports several national level seminars on differentinsurance topics/subjects as well as consumer relatedissues through which it reaches out to the public.Currently, IRDA is actively working on a ConsumerPortal that is proposed to be launched shortly.32