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Pushing for more transparency: IRDA plans tighter disclosure norms

‘Listing brings more transparency to the working of insurers’

By: ENS Economic Bureau | Mumbai |
August 13, 2016 3:03:04 am

The Insurance Regulatory and Development Authority of India (IRDA) is pushing for more transparency in the insurance segment by bringing in uniform disclosure norms for both listed and unlisted companies and mandatory listing of companies.

According to IRDA chairman TS Vijayan, listing brings more transparency to the working of companies. “We thought we will encourage companies to bring in more transparency into their system. Even if the company is not listed, we are thinking whether whatever discloser required by a listed company that can also be brought into an unlisted company,” he said on the sidelines of a CII Insurance Summit.

On Thursday, IRDA proposed that insurance companies having completed 8 years of operations in case of general/re-insurance and ten years of operations in case of life insurance can go for mandatory public listing. As per the regulatory framework in place, the insurance company can get its shares listed through and offer for sale (i.e., the existing promoters can un-lock value) or through a public issue for meeting the capital requirements, IRDA said in a discussion paper on ‘Listing of Indian Insurance Companies’.

All general insurance companies, including the standalone health and reinsurance, shall take steps to get their shares listed on completion of eight years of operations, it said. All life insurance companies should take steps to get their shares listed on completion of 10 years of operations, it said, adding all companies which have already exceeded the number of years of operations shall initiate steps to ensure that they get their shares listed within a period of three years from the date of issue of directions under these guidelines.

On mergers and consolidation in the industry, Vijayan said customer protection is the key and the regulator will ensure that fair treatment is given to them. “If two companies are merging together, it is nothing new in the Indian insurance industry. When LIC was formed many number of companies merged into it,” he said.

“It is a natural process but we are very clear that customer protection is the key, whatever promises the companies have made to the customer is going to be the key. What reserves they are maintaining for the customers is the key. We will be keen to ensure fair treatment of customers,” he said. Vijayan said there is a need to bring in appropriate products that will suit the customer need in the existing environment. “There is a huge market available and challenge before the industry will be to bring out the appropriate products, which can be decided with the help of technology, changes in the environment among others,” the IRDA chairman said.

After the FDI cap was increased, the insurance sector received about Rs 16,000 crore foreign investment. “We have received about Rs 16,000 crore after the FDI cap was increased to 49 per cent ,” he said.

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