IRDAI highlights roadmap till 2047
The Insurance Regulatory and Development Authority of India (IRDAI) has launched a reform agenda to create a progressive, supportive, facilitative and forward-looking regulatory architecture to foster a conducive and competitive environment in line with the government vision of financial inclusion.
According to a press release, the focus of IRDAI is to strengthen the three pillars of the entire insurance ecosystem namely, insurance customers (policyholders), insurance providers (insurers) and insurance distributers (intermediaries) by making available right products to right customers; creating robust grievance redressal mechanism; facilitating ease of doing business in the insurance sector; ensuring the regulatory architecture is aligned with the market dynamics; and boosting innovation, competition and distribution efficiencies while mainstreaming technology and moving towards principle based regulatory regime.
Towards this objective, amendments to various regulations were proposed and were placed for stakeholder comments. This was followed by a series of discussions and interactions with insurers, intermediaries (including individual agents, corporate agents, brokers, insurance marketing firms,.) and experts. A careful evaluation of comments and suggestions was carried out. The amendments to regulations were also placed before the Insurance Advisory Committee (an advisory committee for consultations formed under the IRDA Act 1999).
Some important proposals approved in the 120th Meeting of the Authority held at its headquarters in Hyderabad on Friday, 25th November 2022 include the registration of Indian insurance companies. Key highlights of the amendments in this segment include enabling of private equity funds to directly invest in insurance companies; allowance of subsidiary companies to be promotors of insurance companies; investment of up to 25 percent of the paid up capital by single investment will be treated as investor and anything above to be treated as promotor; allowing the promoters to dilute their stake up to 26 percent; subject to the condition that the insurer has satisfactory solvency record for preceding five years and is listed entity; inclusion of ‘fit and proper’ status of investors and promotors, as well as lock in period of investments for investors and promotors stipulated on the basis of the age of insurer.
Other measures include the increase in tie-up limits for intermediaries, regulatory sandbox framework, other forms of capital and increased responsibilities for appointed actuaries.
The period for considering state/central government premium dues for calculation of solvency position has been increased from 180 days to 365 days. The solvency factors related to crop insurance are also reduced to 0.50 from 0.70 which will release the capital requirements for insurers by around INR1460 crore.
