Financial Daily from THE HINDU group of publications
Friday, Apr 21, 2006
Financial Daily from THE HINDU group of publications Friday, Apr 21, 2006 |
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Money & Banking
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Insurance Disclosures to be must for insurers soon Our Bureau
Mumbai , April 20 It will soon be mandatory for insurance companies to make financial disclosures to the public. Mr C S Rao, Chairman, IRDA said on Thursday that the regulator would be evolving parameters for the kind of financial information that insurance companies should be revealing to the public. "We are working in conjunction with the Life Insurance Council and the General Insurance Council regarding the kinds of financial details that companies should be disclosing to the public. Companies would have to give monthly or quarterly updates about their expense ratio, lapsation ratio and claims ratio", Mr Rao said, speaking to reporters on the sidelines of an insurance seminar. The regulator is also consulting with industry experts for evolving these disclosure norms, he said. Currently, companies do not furnish such financial details to the policyholders. For instance, the expense ratio (the percentage of total funds used to cover operational expenses) of LIC is 9 per cent compared to an average of 29 per cent for the private players. The optimum is considered to be between 5-7 per cent. Mr Rao said the FDI limit on insurance would be hiked from 26 per cent to 49 per cent after the comprehensive Bill on insurance would be passed in the monsoon session of Parliament. "We have recommended to the Finance Ministry that the bill should allow FDI to be out of the ambit of legislation". This would mean that any further hikes in FDI would not require any amendment to the legislation. The insurance bill has taken into account the recommendations of the KP Narasimhan Committee, the Law Commission and the IRDA. Mr Rao said that IRDA has recommended the maintenance of status quo with respect to consumer courts and the ombudsman system for grievance redressal, instead of an appellate authority-as recommended by the Law Commission.
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