Page 41 - Life Insurance Today December 2017

Insurance Regulatory

and Development

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12 year lock in for PE Cos IRDAI mandates linking of policies to Aadhar

IRDAI may ask the private equity IRDAI recently made it mandatory for all individuals to link the existing as well
firms to as new policies to Aadhaar. As notified by the Cen-
come up tral Government, the Prevention of Money-laun-
with lock in dering (Maintenance of Records) Second Amend-
period of ment Rules, 2017 makes Aadhar and PAN/Form 60
10-12 years mandatory for availing financial services.
to ensure that their capital is in- "These rules have statutory force and, as such, life
vested for a longer tenure. The long and general insurers (including standalone health insurers) have to implement
term investment shall support the them without awaiting further instructions," said IRDAI in a circular.
growth of insurance companies and
safeguard the interest of policyhold- Hike in agent commission for 2-wheeler policies
ers' interest.
IRDAI has recently hiked the maximum commission payable to agents for two-
It takes 10-12 years for insurance wheeler motor insurance policies to 17.5% of the
companies to overcome its gestation premium. Previously, it was 15%. On the other
period and pay its shareholders. Pri- hand, the maximum commission payable for 4
vate equity is one of the most un- wheelers such as cars and SUVs (sports utility ve-
stable forms of capital looking for hicles) however remains unchanged at 15% for
appreciation and exit, so a lock-in comprehensive motor insurance policies.
period is required.
The insurance premiums have been hiked by 28% for most vehicle categories
Private equity firms are involved in for 2017-18 and the revised rates came into effect from April 1. The hike in motor
buying stakes of insurance companies third party (TP) insurance premium was about 28% for cars in 1,000-1,500 cc
both as investors and promoters. and those exceeding 1,500 cc. The hike in rates for two-wheelers in the 75-150
Chennai-based Star Health & Allied cc category was 16.3%. The regulator revises premium rates every year after
Insurance Company has many private taking into account the number of claims made and loss ratio for insurers.
equity investors including Apis Part-
ners and ICICI Ventures. Recently,
IRDA has given licence to Narayan Motor Insurance: HC Directs IRDAI to Enhance Accident
Murthy-back Catamaran to invest a PA Cover to Rs. 15 Lakh
large stake in Acko General Insurance. The Madras High Court (MHC) has directed IRDAI
Global private equity firms like KKR to enhance compulsory personal accident (PA)
and Temasek had bought 3.99% cover from Rs. 1 lakh to not less than Rs. 15 lakh.
stake in SBI Life before its IPO. Simi- It will help vehicle-owners paying premium for ve-
larly, private equity firms including hicle cover to get adequate compensation in the
Warburg Pincus and IIFL Special event of death or bodily injury. Indian motor tar-
Fund had bought 12.18% in ICICI iff compensation payable to the legal heirs in case
Lombard General Insurance. of death or bodily injury suffered by the owner.

Life Insurance Today December 2017 41

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