Life insurers resist IRDA’s compulsory listing

The Insurance Regulatory and Development Authority (IRDA) of India wants life insurers to mandatorily list shares on the stock exchanges while the industry has said that promoters should be allowed flexibility in capital management. In a recent meeting with CEOs, the regulator asked insurers to compulsorily evaluate listing in order to improve corporate governance.

The industry, however, suggested that not more than three-four companies are in a position to evaluate listing since growth in new business and profitability remains a challenge.

The regulator had last year issued the IRDAI (Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business) Regulations, 2015 which contain the extant provisions for issuance of capital by life insurers, stated The Economic Times. “We believe that capital management is the prerogative of promoters and they may be provided the flexibility in this regard,” Life Insurance Council, the representative body of life insurance companies said in its response to the regulator.

The industry has asked IRDA to provide flexibility to promoters to decide on listing and allow a gestation period of at least five more years to prepare for listing. The industry said that the mandate should be based on not just tenure but also additional criteria such as improved quality parameters, vintage and embedded value.

With mandatory listing, IRDA wants to improve transparency, governance and disclosure to improve public and customer perception. As per Clause 10 of the amended Insurance Act, the regulator has the power to direct an Indian insurance company to get listed on the stock exchange. The industry has submitted its feedback to the regulator saying that listing requires an evaluation of at least four-five years to operationally focus and prepare to ensure all criteria are in place.