The Insurance Regulatory and Development Authority (Irda) will soon issue guidelines for listing of insurance companies and portability of motor and health insurance policies between companies, Chairman Hari Narayan has said. On listing of non-life insurance companies, the Irda chief said the matter was still before the markets regulator, the Securities and Exchange Board of India (Sebi).
Once the ten-year embargo on floating initial public offers ends, it was up to the insurance companies to list, he said.
“Some companies will complete ten years from 2011, from the middle of next year. If there is enhancement of the FDI (foreign direct investment) cap, there will perhaps be greater activity in the IPO space. We will have to see,” he said.
About microfinance institutions forcing borrowers to buy insurance policies, Narayan said even banks were doing it. “In effect, an individual buys a life insurance policy and in the event he passes away before that loan is repaid, the money realised from the policy is used to settle the loan. It’s called a credit-life policy and is not restricted to microfinance. Even for housing finance companies, it’s quite a standard product,” he said.
On spreading the reach of the industry, he said, “We are trying to work with the insurance industry to figure out more efficient ways of distribution so that the whole cost can be lowered and thereby increase penetration. We have to realise that insurance as a product is relevant to families with income above a certain threshold. If their incomes are below a certain level, insurance is not what they would be looking for. The’ll need something like a social security net that governments typically provide,” ,he said.