E-Paper
HT THIS DAY: October 24, 2004 — Insurance sector opened up to private companies
The Insurance Regulatory and Development Authority issued the first batch of six licences to joint ventures with 26 per cent foreign equity
New Delhi- The Insurance sector has finally been thrown open to private companies. The Insurance Regulatory and Development Authority (IRDA) on Monday issued the first batch of six licences to joint ventures with 26 per cent foreign equity.
Six insurance joint ventures - three in life and three non-life - were granted licences by IRDA chairman N. Rangachari.
Reliance General Insurance Co Ltd, HDFC Standard Life Insurance Company Ltd, Royal Sundaram Alliance Insurance Co Ltd which have already brought in the equity capital, have been given final clearances.
Three other insurance joint ventures - ICICI Prudential Life Insurance Co, Max New York Life Insurance Co Ltd and Iffco-Tokio General Insurance Co - were granted “in-principle clearance” for registration. Once these companies put in their equity, final licences would be accorded by the IRDA.
Sources in the IRDA said that another six cases would be processed for insurance clearances in the next one month.
With the grant of six licences, the monopoly of state-owned insurance companies, including Life Insurance Corporation (LIC), General Insurance Corporation (GIC) and its subsidiaries, has come to an end.
According to indications, all the six firms would be vying to issue the first private insurance policy in the country.
Grant of licences within a very short period after receiving applications has come as a “pleasant surprise” to several promoters who had experienced policy-related inordinate delays in the past three years.
Statutory norms prescribed by the IRDA stipulate that companies in life insurance business will have to bring in ₹200 crore towards equity capital.
For non-life insurance joint ventures the limit has been set at ₹100 crore.
Along with the grant of the first batch of six licences, the IRDA on Monday also allowed setting up of 14 institutes for training insurance agents. However, none of them are located in the northern or eastern regions.
Though 26 per cent foreign equity is allowed in insurance business, Reliance has no foreign partner in the general insurance business. According to industry sources, it may rope in a partner abroad for re-insurance business to reduce its own risks.
