The Hindu : Pension reforms, new norms for health insurance shortly

Online edition of India's National Newspaper
Thursday, Feb 20, 2003

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Pension reforms, new norms for health insurance shortly

By Our Special Correspondent

NEW DELHI FEB. 19. The Insurance Regulatory and Development Authority (IRDA) is optimistic about pension reforms being flagged off shortly to ensure income security for the country's vast unorganised sector. It is also preparing itself for the challenges and planning to come up with fresh guidelines for third party administrators to boost health insurance.

Providing indications in this regard during the Global Conference on Actuaries organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), the IRDA chief, N. Rangachary, said the authority had submitted a report on pension reforms to the Government in October 2001. Discussions were still on and a decision was likely soon.

While the IRDA had given a presentation to the Group of Ministers looking into the crucial issue of pension reforms last year, the Government, he said, was expected to finalise the roadmap by this fiscal.

Voicing concern over the falling interest rate regime and higher longevity of Indian population, Mr. Rangachary said "Pension policies are under strain. It is here that the expertise of actuaries are going to be tested".

Answering questions on the sidelines of the conference, Mr. Rangachary, observed that after successful launch of the telecom business, Reliance was likely to revive its plans to make a foray into yet another greenfield area — life insurance — by March this year. Necessary in-principle permission from the IRDA has already been obtained by Reliance. The IRDA has also granted an extension of time to it to file for the licence by March.

Reliance, ICICI, HDFC, Tata and Bajaj were the only companies, which applied for both life and non-life insurance forays. Sahara India has also submitted to the IRDA its life insurance business plans for clearance. The total number of private companies foraying into life insurance sector goes up to 14. Many of them have already obtained the requisite licences.

The Twelfth Finance Commission Chairman, C. Rangarajan, said with the widening of economy, the demand for new type of insurance had emerged. However, pension needs of a segment having high assured income was different from that of an organised sector, and insurers should go for product innovation, he added.

The Life Insurance Corporation Chairman, S. B. Mathur, pointed out that though one-fourth of the Indian population was insured, yet pension cover was still very low. LIC's premium income from pension schemes rose to Rs. 2,560 crores last fiscal from Rs. 562 crores in 2000-01 and Rs. 200 crores in 1999-2000, he said.

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