The IPO of India’s insurance behemoth Life Insurance Corporation (LIC) is around the corner but IRDA (Insurance Regulatory Development Authority), the body that regulates the insurance sector, has been running without a head for nearly nine months now. The empty post of IRDAI Chairman sends wrong signal to millions of policyholders in terms of governance of the insurance sector, especially when the government is selling its stake in LIC, experts told BusinessLine. The Government is likely to raise around ₹85,000 crore through a share sale in LIC, which may be launched at around ₹16 lakh crore. LIC has started issuing newspaper advertisements about its proposed IPO and the company is likely to file its draft prospectus next week, sources said. LIC’s will be the largest IPO that India has seen so far and it will also be among the world’s 10 largest equity share sale.  Matter of grave public interest The importance of a well functioning IRDA can also be gauged from the fact that India’s insurance sector is far bigger than the country’s mutual funds industry. If the MF industry managed assets worth nearly ₹40 lakh crore and any laxity in regulating them generates hue and cry, then ULIPs (unit linked insurance plans) by life insurance companies alone have an AUM (asset under management) of nearly ₹40 lakh crore. In addition, AUM of traditional policies and annuity funds is more than ₹26 lakh crore and ₹9 lakh respectively. It just shows that IRDA’s regulatory authority is no less important than that of the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI). “There is nobody who can bell the cat, hence, the government has found it convenient to run IRDA without a Chairman for nine months. The empty IRDA Chairman’s post ahead of LIC’s mega IPO is reflecting poorly on the government’s image,” said a former member of IRDA.  Sources there were nobody among the bureaucrats in New Delhi who was taking the responsibility to alert the ministers about the seriousness in appointing IRDA Chairman at the time when India is battling the worst of pandemic. Still, the same government machinery has worked swiftly to ensure that LIC’s mega IPO does not get delayed further and the fund raising happens during the current financial year itself. 

Post vacant

Experts say that government should have started the process of appointment of IRDA Chairman at least six months before the incumbent retired, since it is a time consuming process. The IRDAI Chairman post has been vacant since May 5 after Subhash C Khuntia stepped down on completion of his term. Applications to fill the post were invited in April 2021. 

The IRDA Chairman has a consolidated pay and allowances of ₹4.50 lakh per month without the facility of house and car. Incidentally, the government showed extreme alacrity in extending the term of incumbent RBI Governor Shaktikanta Das and has started the process for appointment of SEBI Chairman before the incumbent Ajay Tyagi’s tenure ends in March.