Indian insurance regulators have drafted a product design proposal that could cause problems for life insurers doing business in India, an analyst says.

The Insurance Regulatory and Development Authority (IRDA) is looking at the idea of requiring players in the insurance market to sell a product that would combine a small amount of life and general insurance at a pre-set price, according to Anshuman Jaswal, a senior analyst at Celent, Boston.

Adoption of that proposal would be bad for the Indian life market, but the market has been opening up rapidly in the past few years, Jaswal says.

The number of insurers has increased to 48 this year, from 6 in 2000, and 36 of the carriers in the market involve joint ventures with insurers from outside India, Jaswal says.

The number of new life policies sold has increased to about 20 million in fiscal year 2010, from 13 million in fiscal year 2008, and ratio of life premiums to gross domestic product increased to 4.7% in 2009, from 1.8% in 2000, according to Celent.

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