IRDAI proposes allowing insurers to invest 20% in debt of infrastructure SPVs
The Insurance Regulatory and Development Authority of India (Insurance Regulatory and Development Authority of India) has proposed permitting insurers to invest up to 20 per cent of their funds in debt instruments issued by public limited special purpose vehicles (SPVs) operating in the infrastructure sector. However, such investments will be allowed only in projects that have already commenced commercial operations and where cash flows have stabilised, according to the draft proposal.
Industry experts believe the move could open a new and relatively stable investment avenue for insurers while supporting long-term funding needs of India’s infrastructure sector. Aneesh Srivastava, Executive Director and Chief Investment Officer at Star Health and Allied Insurance, said the proposal removes the earlier requirement of a parent company guarantee for investing in infrastructure SPVs.
“We will be investing only in those companies which are operational with stable cash flows,” he said, adding that risks in infrastructure projects are highest during the construction phase and reduce significantly once operations begin.
Srivastava noted that insurers had earlier found it difficult to invest in infrastructure SPVs due to the absence of guarantees. With this restriction eased, insurers are expected to actively explore investments in operational projects offering predictable returns, thereby aligning long-term insurance funds with national infrastructure development needs.
Need to track, trace unclaimed insurance funds: IRDAI member
There is a pressing need to systematically track and trace unclaimed insurance funds, with the regulator engaging multiple networks and databases to reach rightful beneficiaries, said Swaminathan Iyer, Member (Life), Insurance Regulatory and Development Authority of India. Speaking at the CII Financing Summit, Iyer noted that unclaimed funds across financial services are estimated at nearly Rs 1.9 trillion, and proactive recovery efforts would act as a form of “assurance” to strengthen public confidence and insurance penetration.
IRDAI’s FY24 annual report showed that unclaimed amounts with life insurers declined marginally to Rs 20,062 crore at the end of FY24 from Rs 22,237 crore at the start of the year, reflecting a net reduction of Rs 1,018 crore during a special industry-wide drive. While the progress is encouraging, Iyer emphasised that much more needs to be done through coordinated use of data and outreach mechanisms.
He added that closing India’s protection gap will require simplifying products and ensuring affordability, accessibility, acceptability and assurance to meet the goal of “insurance for all by 2047.” Trust deficits persist, he said, and insurers must set short-term targets every two to three years while expanding reach into hinterland markets and addressing ground-level realities.
Govt does not advise LIC on investments: FinMin
The Ministry of Finance has clarified that it does not issue any advisory or directive to the state-owned Life Insurance Corporation of India on how to invest its funds. Responding to a Lok Sabha query, the ministry said LIC’s investment decisions are taken independently by its management after due diligence, risk assessment and adherence to fiduciary norms. These decisions are governed by the Insurance Act, 1938, and regulations framed by IRDAI, the RBI and Sebi.
The clarification came amid questions on whether the government or the Department of Financial Services had directed LIC or other public-sector financial institutions to invest in Adani Group companies. The ministry categorically denied issuing any such guidance.
Providing details of LIC’s portfolio, the finance ministry said the insurer invests across the top 500 listed companies on the NSE and BSE, with a significant share in large-cap stocks. As of September 30, 2025, LIC’s book value of investments in Nifty 50 companies stood at Rs 4.31 trillion, accounting for 45.85 per cent of its total equity investments.
Data shared also showed LIC’s book value of investment in debt securities of public and private companies at Rs 4.65 trillion, while equity investments stood at Rs 9.4 trillion. Among private entities, LIC’s largest exposure is to HDFC Bank and Reliance Industries across both equity and debt.
Bottlenecks delay rollout of Bima Vistaar
The launch of Bima Vistaar, the proposed all-in-one affordable insurance product of the Insurance Regulatory and Development Authority of India, has been delayed by several months, nearly two years after it was first announced. Bima Vistaar is a key pillar of IRDAI’s “Bima Trinity” initiative, alongside Bima Sugam, a digital public insurance platform, and Bima Vahak, a last-mile distribution channel aimed at rural households through women intermediaries.
Industry executives attribute the delay to a mix of technical challenges and unresolved concerns around pricing. A senior general insurance executive said insurers have been awaiting clarity, with discussions complicated by system integration issues and the need to revisit product pricing. The product was earlier indicated to be priced at around Rs 1,500 per individual, offering bundled cover for life, health, personal accident and property, and was expected to launch in April 2025.
The concept, championed by former IRDAI chairman Debashis Panda, has seen multiple postponements. While the new IRDAI chairman Ajay Seth recently launched the Bima Sugam platform, full transactional capabilities are yet to go live as insurers complete backend integration. Industry sources say fresh consultations on pricing and riders are likely, especially after the waiver of GST on individual life and health insurance premiums altered market dynamics.
Improve quality and timeliness of complaint resolution: IRDAI chief
IRDAI chairman Ajay Seth has asked insurers to significantly improve the quality and timeliness of grievance redressal, citing rising complaint volumes and the need to reinforce trust in insurance. Addressing Chief Compliance Officers and Grievance Redressal Officers of insurers, Seth stressed that compliance and complaint handling are central to sustaining policyholder confidence.
He directed insurers to put in place clear and standardised operating procedures to distinguish complaints from service requests and to adopt a more proactive, customer-centric approach. Strengthening internal systems to ensure strict adherence to prescribed timelines was highlighted as a priority.
“Compliance cannot be a department—it must be a mind-set. And grievance redressal cannot be the end of a process—it must be our early warning system,” Seth said, urging insurers to consistently choose the customer when in doubt. He added that such an approach would strengthen trust and support long-term growth of the industry.
During the meeting, IRDAI reviewed existing compliance practices and the effectiveness of grievance mechanisms. Insurance Ombudsmen from Bhopal and Thane also shared operational challenges faced in handling complaints, helping identify emerging trends in policyholder issues. The regulator said these insights would guide further improvements in responsiveness and service standards across the insurance sector.
Insurers, brokers may face penalty, compensation for harassing policyholders
Aggrieved policyholders may soon be eligible for higher compensation and penalties in cases of harassment by insurers or insurance brokers, under proposed amendments to the Insurance Ombudsman rules by the Ministry of Finance. According to the draft Insurance Ombudsman (Amendment) Rules, complainants could receive compensation of up to Rs 1 lakh for mental harassment, while insurers or brokers may be penalised up to Rs 20 lakh for unjust or mala fide actions.
The draft proposes that every complaint received by the insurance ombudsman must be registered within one working day, strengthening timelines in grievance redressal. While compensation for loss will continue to be capped by policy terms, the ombudsman may impose additional penalties for undue hardship caused by arbitrary or unfair conduct. The proposed penalty could extend up to 100 per cent of the award amount, subject to limits of Rs 20 lakh for consequential loss and Rs 1 lakh for mental harassment.
Currently, the ombudsman cannot award compensation exceeding Rs 50 lakh, inclusive of expenses. Another significant change proposes making ombudsman awards binding on insurers or brokers unless appealed. In cases of non-compliance within the stipulated period, insurers or brokers would have to pay penalties in addition to interest, unlike the existing framework where only interest is applicable. The draft rules, first notified in 2017, will be finalised after stakeholder consultations.
Sustained high growth essential to achieve Viksit Bharat by 2047: Ajay Seth
Achieving the vision of a ‘Viksit Bharat’ or developed India by 2047 requires sustained high and inclusive economic growth supported by analytical clarity and institutional discipline, said Ajay Seth, former Union Finance Secretary and Chairman of the Insurance Regulatory and Development Authority of India. Delivering the PR Brahmananda Memorial Lecture at the 108th annual conference of the Indian Economic Association, Seth said the core challenge lies not in achieving growth, but in sustaining higher growth rates over a long period.
He said India has the potential to grow at 7 per cent annually over the next two decades, but reaching and maintaining an 8 per cent trajectory would require significant structural effort. Higher sustained growth, he noted, would have a powerful compounding impact on development outcomes.
Highlighting global challenges such as geopolitical tensions, slowing world growth and restrictive trade conditions, Seth said India must navigate these headwinds carefully. He pointed out that while India is now a $4 trillion economy and the world’s fifth largest, it still trails far behind China and the US. Despite favourable demographics, macroeconomic stability and a strong financial sector, Seth identified challenges including the ‘Missing Middle’ in manufacturing, gaps in education and health outcomes, and the risk of falling into a middle-income trap as per capita incomes rise.
