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Insurance regulator opposes 20% hike in investment cap

HT Correspondent, Hindustan Times  New Delhi, December 10, 2012
First Published: 22:27 IST(10/12/2012) | Last Updated: 23:01 IST(10/12/2012)

Allowing insurance firms to invest up to 30% in a listed company would be “imprudent” as insurers need to be conservative in their approach and not as aggressive as venture capitalists, the insurance regulator on Monday said.

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The finance ministry has already finalised a notification allowing Life Insurance Corporation to invest upto 30% in a listed company.

As per the Insurance Act an insurance company at present can invest 10% of the fund or 10% of the company’s stake whichever is lower.

“I think insurance companies must be more conservative in their approach… I would urge that prudence should be hallmark of insurance,” J Hari
Narayan, chairman, Insurance Regulatory and Development Authority (IRDA) said on the sidelines of a Ficci function.

“The government had proposed a certain pattern of investment with certain prudential limit for LIC and called our commentwhich we have given,” he said.

LIC has been keen on investing more than the 10% that it is currently to invest in other listed firms as it is sitting on a huge cash reserve.http://www.hindustantimes.com/Images/Popup/2012/12/11_12_biz4.jpg

He said the Centre must look at launching a national health insurance scheme by combining existing plans to improve penetration and coverage.


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