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K.V. Kurmanath

Hyderabad , Nov. 26

LIFE Insurance Corporation of India (LIC) has welcomed the flow of foreign direct investment (FDI) into the Indian insurance business.

Mr A.K. Shukla, Chairman of LIC, said the industry needed capital to meet the statutory solvency margins and sustain developmental plans as the market offered huge scope for growth.

The Insurance Regulatory and Development Authority (IRDA) had recently said that it was in favour of hiking the FDI from 26 per cent to 49 per cent. This, it felt, was needed in order to make the insurance companies sustain growth.

"It (FDIs) will help the industry to grow. We never objected to the FDIs in the sector. In fact, we welcome it," Mr Shukla told Business Line here on Saturday.

Solvency margins were required in order to protect the interests of policyholders.

Generally, it would take six to seven years for insurance companies to get surplus. They needed capital. More and more infusion of capital would only help the industry, he said when asked for his comments on the move to allow FDI in the sector.

The LIC has a solvency margin of Rs 21,000 crore, representing 122 per cent of the liabilities against the 150 per cent stipulated by theIRDA. Mr Shukla said the corporation was confident of achieving the requisite figure in a year.

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