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A slew of initial public offerings (IPOs) from insurance sector players is on the cards soon after the regulator comes up with the final guidelines for such public floats, a Finance Ministry official said.
According to the Insurance Regulatory and Development Authority (IRDA) Chairman, Mr J. Hari Narayan, the final IPO guidelines for insurance firms would be in place by this month end.
“Several insurance companies are completing 10 years of operations shortly. After this they may be allowed by the regulator to go for an IPO. IRDA has had extensive discussions with SEBI on the proposed guidelines, and final guidelines are expected shortly”, Mr Shashi Kant Sharma, Secretary, Department of Financial Services, said at the 14th Annual Conference on Insurance, ‘India Insurance: Turning 10, Going on 20', organised by FICCI here.
Mr Hari Narayan told reporters on the sidelines of the conference that under the current law, any company may get listed after it finishes ten years. HDFC Standard Life and ICICI Prudential Life Insurance are among those companies that would qualify under the current norms.
Insurance penetration
The insurance industry was opened up to the private sector in 2000. Mr Sharma pointed out that insurance penetration in the country has more than doubled over the last decade from 1.9 per cent of Gross Domestic Product (GDP) in 1998-99 to over 5 per cent of GDP in 2009. Also, insurance density has grown five times from $8.5 premium per capita in 1999 to $54.30 premium per capita in 2009.
The total insurance premium has grown five-fold and stood at over Rs 3 lakh crore in end-March 2010. While the life insurance segment had done quite well, the non-life segment is still a laggard, it was pointed out.
In its second decade after opening up, reforms will come through the enactment of the Insurance Laws (Amendment) Bill, which is currently before the Standing Committee on Finance.
Apart from allowing enhanced foreign equity of 49 per cent in insurance companies, the Bill would also enable such companies to raise capital in forms other than pure equity.
Mr Sharma said that the Finance Ministry was yet to receive the Standing Committee's report on the Insurance Laws (Amendment) Bill.
“The coming decade will see lot of activities in the insurance industry. Keeping in view the immense business potential in tapping Indian insurance market, we expect more foreign joint ventures to materialise and slew of IPOs in the sector”, Mr Sharma said.
krsrivats@thehindu.co.in
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