Page 13 - Insurance Times November 2022

two consecutive years immediately
After Max Life, IRDAI fines Axis Bank Rs. 2 crore
preceding can be included in the ap-
After penalising Max Life Rs 3 crore for its deal with Axis Bank, the IRDAI has
proved category.
imposed a Rs 2-crore penalty on the private lender.
A committee set up by the regulator
The penalty is in respect of two charges made by IRDAI, one of which pertains
last year had recommended allowing
to noncompliance of its instructions. The second charge is that Axis Bank
insurers to invest in equity sans the divi-
made undue gains from a transaction Max Life Insurance shares.
dend criterion.
"By undertaking the transactions of transfer of shares with the promoters/
"Industry in various interactions with
shareholders of the insurer (Max Life Insurance) in violation of the directions
the regulator has sought further
of the authority, the corporate agent, Axis Bank, has circumvented the maxi-
liberalised investment norms," said an
mum limits of commission or remuneration as stipulated in IRDAI," the regu-
official aware of the developments.
lator said in its order.
"It is being looked at whether to scrap
The insurance watchdog has asked the bank to remit the penalty within 21
it (dividend rule) or lower the limit, but
days. It has also asked the bank to place the order before its board at the next
any relaxation will be provided with
meeting so that it can take note of the violation and take preventive steps.
prudent regulations to protect policy-
holders."
IRDAI proposes conditions invested in the financial sector in India
IRDAI had relaxed the dividend norm
or the other jurisdictions.
for private equity funds in following the pandemic for the year April
As per the proposed amendment to the 1, 2020 to March 31, 2021 when many
insurance companies existing rules, a registration application companies were forced to skip dividends.
An exposure draft released by IRDAI has to carry on an insurance business shall In August, it notified that the relaxation
proposed to allow private equity (PE) not be eligible to apply for the requisi- will continue beyond September 2022.
funds to come in as promoters of tion, where the requisition for registra-
The regulator allowed investment in
insurance and reinsurance companies, tion application has been rejected by
equity shares of firms that paid divi-
with certain conditions, including the IRDAI or withdrawn by the appli-
dends "for at least two years out of
that the PE funds have to complete cants at any time during five financial
three consecutive years immediately
10 years of operation and funds years preceding the date of application,
preceding" to be categorised as "ap-
raised by them, including their group certificate of registration has been can-
proved investment".
entities, must amount to $500 million celled by the authority, or the investors
Under Regulation 3(5) of IRDAI (Invest-
or more. or promoter of the existing venture
ment) Regulations, 2016 no insurer can
have exited for any reason at any time
IRDAI has also proposed to amend the
invest in "Equity shares of any listed
during the preceding two financial
existing regulations to provide "fit and company on which not less than 10%
years, from the date of requisition for
proper criteria" for applicants desiring
dividends have been paid for at least
registration application.
to carry on insurance business, limits of
two consecutive years immediately
investment to be made in insurance preceding".
companies, lock-in period on investment Dividend criterion may be
and simplify the process of insurers' reg-
eased for insurers' equity IRDAI doesn't renew li-
istration.
investments cence of Rothshield TPA
According to the exposure draft, pri-
The IRDAI may allow equity investment
vate equity funds may invest in the ap- IRDAI has not renewed the licence of
even in non-dividend paying companies
plicants in the capacity of promoter or Mumbai-based Rothshield Insurance
to be included in the approved invest-
investor. A private equity fund may in- TPA for not complying with minimum
ment category subject to some condi-
vest in any insurer in the capacity of business requirements by the regulator.
tions. This would increase the eligible
"promoter", only if it has completed 10 In an order, IRDAI directed Rothshield
universe of companies they can invest
years of operation, funds raised by the TPA to remove the word insurance TPA
in, boosting allocation to stocks.
PE fund including its group entity or from its name and to immediately sub-
entities is $500 million or more, in- Under the existing norms, only invest- mit data, documents and record relat-
vestible funds available with the PE fund ment in listed companies that have paid ing to the TPA business carried on by it,
are not less than $100 million and it has a minimum 10% dividend for at least if any, to respective insurers.
The Insurance Times November 2022 11