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Tuesday, September 25, 2012

IRDA Chief favours FDI hike in insurance sector

Insurance Regulatory and Development Authority (IRDA) Chairman J. Hari Narayan welcomed the suggestion to hike foreign direct investment in the sector. He was speaking to the media at an insurance summit organised by Assocham.

“Capital from FDI will definitely help. The total volume of money in the IPOs (initial public offer) raised by insurance companies is limited. So, like other sectors, insurance too will require greater levels of investment and in that regard, we will welcome steps to increase FDI in the industry,” he said.

Hari Narayan said the Bill for raising FDI level in insurance has been moved in Parliament and that the inputs by the regulator have been given.

Talking about replicating banking sector’s “lead banking model,” he proposed the idea of “lead insurance model” to focus on the social and rural areas on the basis of geographies.

“A lead insurance player will take the lead in certain geographies and focus more in some States… It is just an idea,” Hari Narayan said.

“Our Act imposes burden on insurance companies to sell certain products in rural and social areas living in certain geographies. Our experience is that insurance penetration in social and rural areas has not happened,” he said.

Asked if the industry is ready for reforms, the IRDA chief said, “The good part of the reforms in the insurance sector is tied up with the insurance amendment Bill. The reforms can be considered only if the Bill is passed. Unless that is done, the rest will be in the form of window dressing and the present structure will remain.”


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