Chennai: In a surprise move, the Insurance Regulatory and Development Authority (IRDA) has temporarily shelved the decision to implement the guidance note prepared by the Actuarial Society of India (ASI) on how sales illustrations will be prepared by life insurers. (See )

According to life insurance companies, the IRDA did not give any reason for keeping the guidance note in abeyance which was supposed to come into effect from 1st of January this year. The last minute decision of IRDA has surprised many life insurers as they had already spent money on redesigning sales literature.

The issue is to be discussed at the Life Insurance Council meeting to be held on 9th of this month in Mumbai.

According to industry sources, some private life insurance companies selling unit linked policies have expressed their reservation on the manner of specifying the probable rate of returns to a prospect. Some life insurers show the returns net of expenses and some as gross.

The other reason doing the rounds is that some insurers, not able to prepare the revised sales illustrations given their wide distribution network, wanted more time.

Almost all private life insurers have some kind of sales illustration. The ASI brought in its norms to allow for uniformity in this, to help the buyers to compare products of different companies.

ASI president Liyaquat Khan says: "It is an unfortunate step. We are hopeful that the norms for sales illustrations come into force as it is the first and effective step to protect the policyholders. Abroad such norms are very robust."

With the IRDA allowing the 'file and use' procedure for a new product, sales illustrations are being made a part of the papers that are to be filed before a product is introduced in the market.