IRDA plans new mortality rates, Life Insurance to get cheaper in 2013

The market regulator for the Insurance Industry in India, IRDA (Insurance Regulatory and Development Authority) has indicated its plan to release new mortality rates by starting of next financial year. This would affect all Life Insurance Policies, existing and new. Once this rate is put into practice the life insurance premium is expected to go down. The proposed new table for mortality rates, awaiting IRDA’s approval would be finalized on the basis of the latest mortality experiences varying across ages.
IRDA is an autonomous statutory body enacted under the act of Parliament. It has a duty to promote and regulate insurance and reinsurance business and to protect the interest of and secure fair treatment to the policy holders. Further Indian Insurance Companies are regulated by the terms and conditions of IRDA
According to Mr. J. Hari Narayan, Chairman of IRDA at the time of addressing the forum said that since the life expectancy rate has gone up for most of the categories, there is a need for revision in mortality rate. He also added that for this the new table has already been finalized and which will be applicable from next financial year. This new table is an improvement over the existing table as it is be based on the latest mortality and claim experience of different life insurance companies. He also said that on account of this revision of rates life insurance premium is expected to come down.
The above revision in mortality rate was necessitated based on the fact that the average life expectancy has improved from 60 years in 1996 to 65 years in 2011. Life insurers currently use LIC’s 1994-96 mortality table which provides mortality rate per thousand, modified in line with insurers own risk assessment.   The new mortality table will be based on 2004 – 08 data which will consider the life expectancy of 65 years and hence will eventually bring down the premium amount.