Advocating the need to hike foreign direct investment (FDI) cap in the insurance sector, chairman of the Insurance Regulatory Development Authority (IRDA) said that FDI in insurance would enable the companies to grow and infuse more capital in the business as most of the insurance companies are going through capital crunch, he was addressing an ASSOCHAM event held here in Mumbai today.
While inaugurating two-day ‘Global Insurance Summit: Finding the god particle in the insurance industry’ organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), Mr J. Hari Narayan said, “Insurance, like many other sectors in India requires greater levels of investments and in that regard we would welcome steps to increase FDI in the insurance industry.
Bill for enhancing FDI in insurance industry has been moved by the government in the parliament and we have provided all our inputs to the government in this behalf, said Mr Narayan.
IRDA has also given its views on tax and investment norms in insurance sector ahead of their meeting with the FinMin on Wednesday, informed the chairman. “Certain tax measures will be beneficiary and will encourage the growth of insurance industry.
This is in reference to the meeting of select top insurance companies with the finance minister on September 4, where measures to underpin and strengthen the growth of insurance sector were suggested and the meeting on Wednesday is in furtherance to that as they would be sitting down to examine all measures most of which are related to income tax, service tax and so on, informed the IRDA chief.
Talking about the guidelines on life-insurance products, Mr Narayan said “Draft guidelines on life-insurance products will be sent to the life council for discussion within two-three weeks time.
IRDA is also comfortable with banks buying a stake in insurance industry to gain more exposure in the industrys profitability, said Mr Narayan.
Talking about the international practices of tying and bundling the insurance policies and services, the regulator said “IRDA is examining the international practices and will shortly be coming out with guidelines on the appropriate matter.
On the issue of faster approval of products, the IRDA chief said that what matters is the quality of products that have been cleared and not the speed.
Mr Narayan also urged the industry players to reduce the high levels of agent attrition rate in India and it can’t be contained merely by increasing the commission but there is a need to strike the balance.
Talking about the reforms in the insurance sector, the regulator said “Good part of the reforms in the insurance sector is tied up with the insurance amendment bill with certain basic structural features of the insurance industry and can be considered when the bill is considered and passed by the parliament.
“But unless that is done, rest of it will only be in the window dressing stage and the fundamental structure won’t be addressed, he added.
Shairing his views on approval of pension products, Mr Narayan said “Only the proper pension products which end into an annuity and if there is a withdrawal in between during the tenure of the product, a certain proportion can be commuted in cash, but the balance will again have to be rendered in an annuity.†“So the products of that nature will certainly be cleared but the products which are only called pensions without any pension element in it will not be approved.
Amid others who spoke during the ASSOCHAM event included: Â Â Dr. P. Nandagopal, Chairman ASSOCHAM Insurance Council and Managing Director & CEO, IndiaFirst Life Insurance; Mr. S Roy Chowdhury, Member – Life, IRDA; Mr. G. Srinivasan, Co-Chairman ASSOCHAM Insurance Council & CMD, United India Insurance Co. Ltd.; Mr. A R Sekar, Joint Chairman ASSOCHAM Insurance Council & CMD, The New India Assurance Co. Ltd.; Mr. Rohan Sachdev, Partner, Leader-Insurance, Ernst & Young and Mr D.S. Rawat, national secretary general of ASSOCHAM.
