The International Financial Services Centres Authority (IFSCA) vide notification dated April 12, 2022 has issued a Report of the expert committee on Longevity Finance (Report) and subsequently issued a Press Release dated April 13, 2022.
Background
The IFSCA has set sights to develop a Longevity Finance Hub in the GIFT IFSC. The IFSCA had constituted a Committee which has in it’s report analysed the concept of longevity, India’ opportunities and challenges, longevity products and the eco-system. The report also discusses the key enablers to develop a Longevity Finance Hub in the GIFT IFSC.
The major highlights are as below:
- Introduction – ‘Longevity’ has no set definition and means different things for different people. It is an obvious and undeniable fact that populations around the world are aging. The longer a person lives, the more resources they will consume. Longevity is directly proportional to resource requirement.
Longevity science and technology – Longevity science aims to increase healthspan so that people can remain highly functional as they age. Longevity treatments focus on prevention rather than cure. Recent advances in AI and aging research are expected to disrupt traditional models used by life insurance companies and going forward it will help insurance companies to make better decisions regarding risk assessment and premiums and help customers make informed decisions.
- Longevity from Indian perspective – Presently, senior citizens find it difficult to obtain protection under any formal health plans or retirement income schemes. Progressive investment banks, pension funds and insurance companies are already developing new business models to cater to the Longevity industry.
- Longevity Finance and Longevity Finance Hub – Longevity Finance will comprise of five major categories of industries (i.e. banks, asset management firms, insurance, reinsurance companies and pension funds). Longevity Finance Hubs will act as a central point offering all sorts of financial products and services in the Longevity industry ,
- GIFT-IFSC as a Global Longevity Hub (GLH) – IFSCA shall tap this opportunity and encourage setting up of Global Longevity Hub focussing on financial and allied services. Leading corporates and financial institutions such as Banks, Pension Funds, Asset Management Funds, Insurance Companies, among others should be encouraged to come together and jointly form a hub that provides institutional arrangement for the development of GLH in GIFT IFSC.
Initiatives/ Recommendation for creating GLH:
- Skill development Financial Literacy for Women Silver entrepreneurship Sandboxing of Product Ideas and Tech Solutions Life Para Medical Centre Encouraging member companies to develop Longevity products and acknowledge the implementation of the same under a single license.
- Insurance : The report captures certain recommendations pertaining to insurance as follows:
- To permit financial institutions to distribute numerous financial products and services under single license or certificate registration.
- To consider a single composite license for the manufacturers of financial products and services
- To allow financial service providers to engage in other lines of business that are allied to their core businesses. Eg. Allowing insurers to hold subsidiaries operating in Fintech/Insure tech
- To allow life insurers to offer certain value added services to their customers based on their life stage requirement such as holistic wellness program, legacy creation, retirement planning and document vaults
- To file wellness and preventive care initiatives as well as value added services offers as a single document for approval rather than filling the same under each product separately
- To exempt insurers from certain other domestic regulation in order to enable them to invest in long-term bond market and a long-term derivatives market.
- To allow insurers to offer indemnity based individual health products with a minimum tenure of three years
- To allow insurers to offer certain coverage to NRI and Person of Indian Origin (PIOs)
- Pension and annuities – This section of the report talks about the existing pension system in India and the importance of Insurers and Banks in the development of a niche longevity finance product.
- Medical tourism – It states the importance of Insurance companies in developing medical tourism by allowing them to offer coverage to senior foreign nationals or senior NRIs travelling to India.
The Report also covers various recommendations pertaining to Banking, Capital market, Assets and Wealth Management and peripheral eco-system for Longevity fiancé.
Source category: IFSC Insurance Office
Attachments
- /2022/16_Press_Release-Longevity_finance.pdf
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