The Hindu Business Line : Corporate governance for insurance companies mooted

THE Insurance Regulatory and Development Authority (IRDA) wants to introduce corporate governance in the insurance sector too, but the problem lay in the fact that the companies are not listed on the stock exchanges, Mr T.K. Banerjee, one of the members of the IRDA, has said.

He was delivering the keynote address here on Friday at the inaugural session of a two-day seminar on the insurance industry, organised by Geetam Institute of Foreign Trade in association with SBI Life.

Mr Banerjee said the IRDA itself would have to formulate regulations on the role and function of the board and directors of life insurance companies and non-life insurance companies.

"We are working on the norms and they will be in place to usher in corporate governance in the sector,'' he said.

After the opening up of the sector there was a convergence of financial products, as most of the banks were selling insurance and in future, the insurance companies might take up banking, he said.

"Now three regulatory agencies — the SEBI, the RBI and the IRDA — are functioning. A fourth one might come up soon to regulate pension funds. So it is a major challenge to prevent regulatory overlap. We are working in that direction along with the other agencies,'' he said.

Referring to general insurance, he said de-tariffing with removal of cross-subsidy and introduction of market-based pricing would have to come sooner or later as in the advanced markets.

"But we are going slow, as the companies are not yet ready,'' he said.

On medical insurance, he said, the major challenge was that in the country there was no grading of hospitals and there was no rationalisation of the fees charged by doctors. That would have to be done and there would have to be benchmarks, he said.

He also stressed the importance of micro insurance to bring those below the poverty line or slightly above it into the insurance net. Currently, out of the 104 crore people in the country, only 10 crore people were covered.

"It is a huge gap. There is ample scope for the private as well private sector companies if they can take up the challenge,'' he added.

The Director of the International Institute for Insurance and Finance, Mr M. Appa Rao, said greater attention would have to be paid to insurance education, as "most people in the country are either uninsured or underinsured or improperly insured.''

The universities in the country would have to take up insurance education in right earnest, he pleaded.

The Vice-chancellor of the Andhra University, Prof Y.C. Simhadri, welcomed the opening up of the insurance sector and opined that there was room for both public sector and private sector companies in the market.

The Vice-President of the college, Mr V. Seetharamaiah, presided over the meeting and the convener, Mr. K. Sivaramakrishna, presented a report.

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