IRDA to take call on portability in motor insurance,mediclaim

To a question on whether this portability concept would apply to ULIPs also,he said: “Yes and no. Yes in the sense that there has to be a balance in the churn of ULIP’s policy and their portfolio has to be evenly managed.” Narayan,however,added that portability cannot be randomly applied and the portfolio of an insurance company has to be balanced.

The insurance regulator also said it prefers equal stakes for both local and foreign partners after life insurers float public issues. Hari Narayan indicated that the initial public offering (IPO) norms would be framed in a manner such that post the IPO,both partners would have to dilute their stakes ensuring that a foreign player wouldn’t end up with a majority stake in a joint venture,in violation of the law.

“We are yet to face a situation where a foreign company can have a majority stake in an insurance company. We will take a view when the situation arises,” Hari Narayan said. The IRDA chief was speaking in the context of a possible scenario in which foreign players could end up with a majority share in the event they are allowed to increase their stake to 49 per cent. Currently,there is a cap of 26 per cent on foreign ownership in a life insurance company,as set out in the IRDA Act,though a proposal to increase this to 49 per cent is being considered by the government. Hari Narayan further said that IPO norms for the life insurance companies are expected very shortly.

“We have sent the draft IPO rules to the capital market regulator Sebi and are expecting their approval soon,” he said. The IRDA Act stipulates that the insurance company can divest 25 per cent of its shareholding to the public after ten years of operations. The first life insurance licences,it may be recalled were handed out in December 2000 to ICICI Prudential and HDFC Standard Life. The IRDA chief also said that M&A norms would be announced soon. “A committee is studying the issue,” said Hari Narayan.

Watchdog concerned over infra bonds

Mumbai: Meanwhile,amid a planned issue of Rs 5,000 crore in infrastructure bonds by LIC,IRDA said there are regulatory concerns on such instruments and favoured imposing restrictions on them. “As a regulator,we have certain concerns with regard to insurance companies issuing infrastructure bonds. I think there should be certain curbs on such issues by insurance companies. We are yet to look into this issue,” IRDA chairman J Hari Narayan said.

No insurer has so far approached IRDA on the issue of infrastructure bonds. When asked about its planned issue,LIC chairman T S Vijayan said,“We have not approached IRDA on this. We have not taken a call on as to when and how to approach IRDA.”

As per the current regulation,only pure equity is allowed as capital and debt is not permitted to be raised by insurance firms. Infrastructure financing firm IDFC launched the country’s first tax-free infrastructure bonds to raise Rs 3,400 crore.