Page 40 - Life Insurance Today February 2018

Insurance Regulatory

and Development

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New regulations for bro- Investment norms to undergo significant changes in life
kers soon, says IRDAI insurance
chairman A committee set up by IRDAI has sug- making it difficult, if not impossible, to
gested many changes in the life insur- provide competitive returns to the
The Insurance Regulatory and De-
velopment Au- ance sector, including investment policyholders. Referring to customers'
thority of India norms, to improve the investment re- "reasonable expectation", it said life
(Irdai) will soon turns. Insurers would be able to allo- insurance savings products were often
be releasing new cate a greater corpus in stocks if the compared with products offered by
regulations for recommedations are accepted. banks such as fixed deposits .
brokers as the de- IRDAI had notified the Non- Linked In- The report also observed that the ex-
mand for insur- surance Products Regu- pectation of generating a
ance broking is lations, 2013 and IRDAI return of at least 8 per
growing steadily with 428 brokers in (Linked Insurance Prod- cent per annum was a "tall
the industry as on today, according ucts) Regulations in Feb- order", given that at least
to TS Vijayan, Irdai chairman.
ruary, 2013. IRDAI said 50 per cent of the assets
He said that the insurance industry that it was observed of the insurer are manda-
is active and is growing in double that there was a need to torily to be backed by gov-
digits across segments and the review the regulations because of the ernment securities (G-Secs), which
growth is being fuelled by increasing changing market and economic envi- yield about 6.7-7.2 per cent annually.
adoption of technology and ronment.
digitisation of insurance processes The panel has suggested to "lower the
for the benefit of the customers. IRDA constituted an eight-member mandatory proportion of 'G-Secs' in
committee to make recommendations
Addressing the 14th Insurance Brokers on the amendments required in the the life fund and the pension and gen-
Association Summit (IBAI), he said, eral annuity funds and allow for higher
“We have sent the new broker regula- regulations. The committee in its re- exposure in alternative higher yielding
tions for the Gazette notification with port has recommended that the in- assets (like equity or property) or high
some changes. It will be out soon. The vestment norms "should undergo sig- rated corporate bonds". According to
redrafted regulations will help in gov- nificant change" to improve the re- IRDAI data, life insurance penetration
erning the brokers and maximize value turns generated by the funds while surged from 2.15 per cent in 2001 to
for the policy holders.” taking account of the risks inherent in 4.60 per cent in 2009. Since then, it
various asset classes.
He said that brokers must make claim has exhibited a declining trend reach-
settlements more transparent by The report said the current invest- ing 2.6 per cent in 2014, marginally in-
adopting technology and asked them ment norms were quite restrictive, creasing to 2.72 per cent in 2016.
to improve insurance penetration
across cities. Life insurance has not
even touched 4 per cent and general
insurance is much lower, he said.

40 February 2018 Life Insurance Today

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