Insurance regulator opposes 20% hike in investment cap

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.

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.

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