The Insurance Regulatory and Development Authority (IRDA), on Monday, said it would come out with exposure draft on investment norms, including swaps and hedging, for insurance products by the end of this week.
“The insurance industry has today reached an inflection point, and we can look forward with confidence to a couple of measures brought in to address issues. An exposure draft that we have been working on with industry representatives on the boundary condition of products will hopefully be up by end of week,” said IRDA Chairman J. Hari Narayan while addressing the 15th Confederation of Indian Industry insurance summit here.
“The new norms will have provisions such as swaps and hedges. We have taken baby steps towards risk based solvency. The exposure draft will have some measures and if we move along that route, we can correspondingly have a look at solvency margins. Conceivably, it will come down.
“The point is to think long-term and I do hope that 30 years from now, we will look back and say that the inflection point was well managed,” Mr. Narayan added.
Referring to the performance of the non-life sector, Mr. Narayan said, “the real growth, challenge and opportunity in insurance today lies in the non-life insurance sector in India. The existing insurance companies will have to recast themselves to take advantage of it.”
Mr. Narayan talked about some radical steps when he said, “To reach the full potential of the industry you need to ask yourself if you will allow agents to work across companies and whether an open architecture is feasible. And shouldn’t we, across companies within the group, share agents.”
At the same time, he stated that the industry needed to remember its core essentials. “The insurance industry can’t merely be pegged on better return of money. Its core remains the area of protection. Going forward, the focus of insurance will move towards protection and annuity provision.
And the industry will have to move so that the Life Insurance Corporation does not remain the only company providing annuity. Other players will have to move into the annuity market and give customers a genuine choice,” Mr. Narayan added.
IRDA Chairman also said e-insurance would start soon. “Repositories have already been selected and it will be in place shortly,” he added. The repositories are: NSDL, CDSL, Stock Holding Corporation of India, Karvy Group and Chennai-based CAMS Repository Services Ltd.
