IRDAI has backed its growth push by flagging off reforms in the areas of investment, distribution and management expenses for insurers. The reforms envisage easing limits on investing in the financial sector and allowing insurers to invest in bonds issued for financing infrastructure and affordable housing over their financial sector investment.
Infrastructure and housing are expected to be big investment drivers in the current year. Giving insurers more headroom to invest in long-term bonds issued by banks will enable a better return for policyholders. The regulator also aims to relax the dividend criteria for investment in equities and preference shares under ‘approved investments’, which will give room to invest in new age companies.
According to insurance officials, the new IRDAI chairman, Debashish Panda, has given growth targets to insurers and is facilitating this through reforms. Distribution reforms include allowing corporate agents (which include banks) to tie up with nine insurers each in life, general and health. Currently, corporate agents can sell products of three companies in each segment.
There is also a proposal to allow insurance marketing firms to tie up with six insurance companies in each segment.
