IRDA sets limit for investment in infra bonds

The Insurance Regulatory and Development Authority (IRDA) has re-worked the investment norms for insurance companies.

The regulator has now mandated that a life insurance company should invest not less than 25 per cent of its total corpus in Central government securities. The total investment of such a company in Central and State government securities and other approved securities — all put together — should not be less than 50 per cent.

The IRDA has also prescribed the investment limit for life insurance firms in housing and infrastructure bonds. While permitting them to invest in these bonds, the regulator has made it clear that a life insurance company’s total exposure to these bonds should not be less than 15 per cent of its corpus. However, the IRDA has prescribed that a double ‘A’ rating of bonds is a must for insurance firms to consider investment.

For companies carrying on pension funds, annuity and group business, the new IRDA guidelines have prescribed that not less than 40 per cent of their total funds should be invested in the government bonds and approved securities. In the case of unit-linked insurance business, the IRDA notification made it clear that “the investment in approved investments shall not be less than 75 per cent of such fund(s) in each such segregated funds.”

The regulator also prescribed floor limits for general insurers, including health insurers, to invest in government securities and other approved housing bonds.

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