The insurance industry is set for a big change. Sixteen life and five non-life/health insurers may have to go for mandatory public listing of their shares.

A new proposal of the Insurance Regulatory and Development Authority of India (IRDAI) states that life and general insurers who completed 10 and eight years of business should go for listing.

“They shall initiate steps to ensure that they get their shares listed within a period of three years from the date of issue of directions under these guidelines,” the Authority said in an exposure draft.

Within three months from the issue of guidelines, the board of directors should take up the matter of listing and a roadmap for Initial Public Offer (IPO) should be intimated to the regulator within 45 days from the date of board approval.

Though IRDAI has notified norms for listing of life insurers that completed 10 years in 2015, there is no mandatory listing clause.

There has been lukewarm response from the insures for the same with only a couple of players in the private sector having initiated steps to get listed.

Recently, the Centre had also announced that the national re-insurer and at least one public sector general insurance company will be going public.

There has also been some traction on mergers and acquisitions to increase market share.

Why listing?

In addition to the benefits which accrue to the promoters and shareholders due to public listing of shares, it also enables retail and institutional investors to participate in the fortunes of the company.

“As a result, it brings in shareholders’ participation in the decision-making of the entity,” VR Iyer, IRDAI Member (Finance), said.

The disclosure requirements will be tough and there will also be greater scrutiny of the decision-making process.

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