Business Daily from THE HINDU group of publications
Friday, Dec 29, 2006
ePaper
Business Daily from THE HINDU group of publications Friday, Dec 29, 2006 ePaper |
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Money & Banking
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Insurance Industry & Economy - Foreign Direct Investment Landmark year for insurance sector Prashant K Sahu
New Delhi , Dec. 28 The year 2006 turned out to be a historic year for the insurance sector as regulator IRDA laid the groundwork for free pricinggeneral insurance from 2007, while many companies announced plans to foray into the sector. Both domestic and foreign players vigorously pursued their long-pending demand for increasing the FDI limit from 26 per cent to 49 per cent and toward the fag end of the year, the Government sent the Comprehensive Insurance Bill to Group of Ministers for consideration amid strong reservation from Left parties. The Bill is likely to be taken up in the Budget session of Parliament.
New premiums
The life insurance sector grew new premium at a rate not seen before while the general insurance sector grew at a faster rate and is poised to take a big leap from January. Two new players entered into life insurance - Shriram Life and Bharti Axa Life - taking the total number of life players to 16. There was one new entrant to the non-life sector in the form of a standalone health insurance company - Star Health and Allied Insurance, taking the non-life players to 14. A large number of companies, mostly nationalised banks (about 14) such as Bank of India and Punjab National Bank, have announced plans to enter the insurance sector and some of them have also formed joint ventures. IRDA readied the insurers and brokers in 2006 for detariffing non-life insurance except in motor third party insurance. Insurance companies will only be allowed pricing flexibility initially for the first 15 months, after which policy terms will also be open to change. The proposed change in FDI cap is part of the comprehensive amendments to insurance laws - The Insurance Act of 1999, LIC Act, 1956 and IRDA Act, 1999. After the proposed amendments in the insurance laws LIC would be able to maintain reserves while insurance companies would be able to raise resources other than equity. About 14 banks are in queue to enter insurance sector and 2006 saw several JV announcements while others scout partners. Bank of India has teamed up with Union Bank and Japanese insurance major Dai-ichi Mutual Life while PNB tied up with Vijaya Bank and Principal for foraying into life insurance. Allahabad Bank, Karnataka Bank, Indian Overseas Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc have tied up for forming a non-life insurance company while Bank of Maharashtra has tied up with Shriram Group and South Africa's Sanlam group for non-life insurance foray.
Related Stories: More Stories on : Insurance | Foreign Direct Investment
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