The Hindu Business Line : IRDA backs insurance FDI cap at 49%

(From left) Ms Shikha Sharma, CEO, ICICI Pru Life Insurance; Mr Sunil B Mathur , Chairman, LIC; Mr C.S. Rao, Chairman , IRDA; and Mr Philip Scott, Group Executive Director, Aviva Life International; at an insurance conference in the Capital on Monday. - - Kamal Narang

New Delhi , Oct. 18

THE Insurance Regulatory and Development Authority (IRDA) has said that it favoured a hike in foreign direct investment cap in insurance from 26 to 49 per cent.

"FDI hike is a matter of policy. The Finance Minister has already announced it in the Budget. We do support it," the Chairman of IRDA, Mr C.S. Rao, said at a FICCI seminar on insurance on Monday.

The proposed FDI hike in insurance had to be kept in abeyance due to the strong opposition from the Left parties.

Mr Rao said he also favoured legislative amendments to ensure greater flexibility in investments by insurance companies.

"The Law Commission has submitted a report on a comprehensive insurance legislation to the Finance Ministry," he said.

On the unfair practices being adopted by some corporate agents, Mr Rao said IRDA would come up with stringent guidelines to safeguard the interest of consumers and insurers.

"We would issue some guidelines on the manner of selection of corporate agents, the manner in which their activities should be monitored, and precautions to be taken so that there is complete disclosure of the policy implications for the clients," he said.

Mr Rao said advertisements by corporate agents that misled consumers to believe that they were insurers is a problem that needs to be addressed. "We would like to prevent it before it (the problem) becomes big," he said.

Mr Rao said insurers too need to play an active role in this regard.

"Insurers have to be extremely careful in dealing with corporate agents and keep a vigilant eye on the way the sales are affected," he said.

Addressing industry captains, Mr Rao said IRDA would act as a facilitator for companies to introduce new customer-friendly products.

"IRDA would be happy to facilitate it (introduction of innovative products) by removing any regulatory or tariff-related obstacles," he said. Mr Rao pointed out that with private players bringing in new products, even PSUs such as LIC would have more choice to consumers.

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