Mumbai: Insurance Regulatory and Development Authority The Government of India (IRDA) has supported growth spurt by flagging reforms in the areas of investment, distribution and management expenses for insurance companies. The reforms envisage easing financial sector investment limits and allowing insurance companies to invest in bonds issued to finance infrastructure and affordable housing on their financial sector investments.
Infrastructure and housing are expected to be the major investment drivers in the current year. Giving insurers more headroom to invest in long-term bonds issued by banks will lead to better returns for policyholders. The regulator also aims to relax dividend norms for investments in equities and preference shares under ‘approved investments’, which will give a place to invest in new age companies.
According to insurance officials, Debashish Panda, the new chairman of IRDA, has given growth goals to insurance companies and is facilitating it through reforms. Distribution reforms include allowing corporate agents (which include banks) to tie up with nine insurers across life, general and health. At present corporate agents can sell products of three companies in each segment.
It is also proposed to allow insurance marketing firms to tie up with six insurance companies in each segment.
Also, corporate agents can sell insurance to businesses without any limit on the sum insured. The move will allow smaller insurers to tie up with larger distributors to acquire stake, which has already reached a peak in terms of number of companies. For customers, this would mean more choice of insurance companies. This will be another step towards ‘open architecture’ where distributors can sell products of any company.
To facilitate growth, it is also proposed to allow insurance companies to raise other forms of capital without prior permission. Further, the limit for issue of such capital is likely to be increased to 50% of the paid-up capital or net worth of the insurer.
Infrastructure and housing are expected to be the major investment drivers in the current year. Giving insurers more headroom to invest in long-term bonds issued by banks will lead to better returns for policyholders. The regulator also aims to relax dividend norms for investments in equities and preference shares under ‘approved investments’, which will give a place to invest in new age companies.
According to insurance officials, Debashish Panda, the new chairman of IRDA, has given growth goals to insurance companies and is facilitating it through reforms. Distribution reforms include allowing corporate agents (which include banks) to tie up with nine insurers across life, general and health. At present corporate agents can sell products of three companies in each segment.
It is also proposed to allow insurance marketing firms to tie up with six insurance companies in each segment.
Also, corporate agents can sell insurance to businesses without any limit on the sum insured. The move will allow smaller insurers to tie up with larger distributors to acquire stake, which has already reached a peak in terms of number of companies. For customers, this would mean more choice of insurance companies. This will be another step towards ‘open architecture’ where distributors can sell products of any company.
To facilitate growth, it is also proposed to allow insurance companies to raise other forms of capital without prior permission. Further, the limit for issue of such capital is likely to be increased to 50% of the paid-up capital or net worth of the insurer.