If insurance regulator has its way, minimum entry capital requirement of ₹100 crore for setting up an insurance business will be lifted which would facilitate the entry of multiple players such as standalone micro insurers and niche players, reported Business Standard.
Debasish Panda, chairman, Insurance Regulatory and Development Authority of India (Irdai), said it should be left to the regulator to decide the entry fee for interested players, depending on the size of the business and operations. According to the current norms, insurers are required to have a minimum paid-up capital of ₹100 crore, the report said.
“We propose to request the government to amend the (IRDA) Act and remove the so-called minimum requirement. It should allow the regulator to decide that, based on regulations that will be framed and amended from time to time depending on the market conditions,” Panda said in an address to the industry and the press.
Among the many changes in regulations that Panda seeks are the investment guidelines. “The current investment guidelines for the assets under management are being revisited, and the ask from the industry is that they should be given a little more leeway so that they can invest in riskier instruments such as infra financing,” Panda said.
The regulator is also looking at revisiting the current investment norms to rationalise them so as to bring more investments into the country.
The Irdai chief also asked insurance companies to come up with a road map when it comes to going public. “Our idea is to nudge them to go for listing and therefore have access to the markets to raise capital,” Panda said. “Today with the LIC listing, close to 60 per cent of the market gets listed. That brings in a lot of transparency, disclosures, and access to the market to raise capital. This will help them grow, and our ultimate target of deepening insurance penetration will happen.”
The insurance regulator also intends to reduce the compliance burden on the insurance companies, which will help reduce the cost of compliance for companies and reduce the requirement of resources and time. A working group will be formed to look into this.
Commenting on the state of the three state-owned general insurers, Panda said, “The government is very much aware of the present financials of the insurance companies. The regulator has given some forbearance with advice that they have to infuse more capital in order to perform at an optimum level.”
It also wants to facilitate the lowering of operating costs and review the commission and the remuneration structure of insurance products to reduce cost for policyholders.
“The broad vision is that every Indian should have a life insurance cover; every household should have a health insurance cover. Also, everyone at the bottom of the period mandatorily should have dwelling insurance cover. We also want to have one stop insurance solutions for MSMEs. We also want to provide income security for the ageing population through annuity and pension products,” Panda said.