Money & Banking

IRDAI says it is ‘yet to get’ proposal from LIC on IPO

PTI Mumbai | Updated on February 18, 2020

Subhash Chandra Khuntia, Chairman, IRDA   -  THE HINDU

Insurance watchdog Insurance Regulation and Development Authority of India (IRDAI) is yet to get any proposal from life insurance behemoth LIC on an initial public offering, but feels a listing is better from a governance perspective, chairman S C Khuntia said on Tuesday.

He also said that there is nothing for the life insurance industry to worry for the time being with regard to government’s move on certain income tax exemptions as the alternative to invest still exists.

Khuntia also asked insurance companies to “weed out” loss-making products and concentrate only on the better paying ones.

On the Life Insurance Corporation of India IPO announcement in the budget, he said, “LIC proposal has not yet come“.

“Any company which goes public there will be better corporate governance and better disclosure, he told reporters on the sidelines of an event of actuaries here.

On being asked if LIC’s business will need any restructuring before IPO, Khuntia said that work on the same is being carried out by the government.

He said it is a good idea for every insurance company to list and the IRDAI will nudge entities to go for the same.

It is, however, not making it mandatory to list because smaller companies are yet to achieve the scale for going public, Khuntia said, adding that ideally a company should achieve sufficient scale to list within ten years of its existence.

He said the practice of annual product review needs to be carried out in full seriousness by the players and pitched for a weeding out of the loss making ones.

Khuntia went public with his disappointment at the low growth levels of the life and general insurance segments despite the under penetration in India.

General insurance grew at 14 per cent last year as against its potential to grow at 17-18 per cent, while the life insurance segment grew only at 10 per cent as against the 12-13 per cent potential, he said.

Terming the actuaries as the conscience keepers of the insurance industry, Khuntia asked the Institute of Actuaries of India to take more efforts to increase the number, adding that inherent skill sets in mathematics and software make Indians very amenable to the stream.

He said India has only 460 actuaries for a population of 1.30 billion, while the US has 37,000 actuaries despite having less than a third of Indian population.

Published on February 18, 2020

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