Page 5 - Insurance Times October 2019

General Insurance

News

Workers in J&K and FinMin allows 100% FDI in insurance intermediaries
Mixed reactions have been evoked as Finance Minister Nirmala Sitharaman’s
Ladakh will be covered
declared to allow 100% foreign direct investment
by EPFO soon (FDI) in insurance intermediaries. The finance
Following the abrogation of Article minister stated that the government will exam-
370, the ine suggestions of further opening up of FDI in
Employ- sectors, inclusive of insurance, and will also allow
ees Provi- 100% FDI for insurance intermediaries.
den t In the insurance sector, FDI is now capped at 49% under the automatic route
Fund and including insurance broking, insurance companies, third party administrators,
Miscella- surveyors and loss assessors. “The government has taken a view on increasing
neous FDI in the sector from a macro perspective. The move will have both pros and
Provisions Act, 1952, will be imple- cons,” said G Srinivasan, Director, National Insurance Academy, and former
mented in the Union Territories Chairman, New India Assurance.
(UTs) of Jammu and Kashmir, and
Ladakh. Ratings of 3 public insurers downgraded

The move, which will bring estab- Global rating agency AM Best, which focuses on insurance sector, has down-
lishments and workers in the two graded 3 public sector companies - National In-
UTs within the ambit of the Employ- surance, United India Insurance and Oriental In-
ees’ Provident Fund Organisation surance - reflecting deterioration in their oper-
(EPFO), was approved at a meeting ating performance and underwriting losses.
of the EPFO’s Central Board of Trust- These companies may require around Rs 5,000
ees (CBT) last week. At present, they crore recapitalisation to meet the regulatory
are covered by the J&K Employees’ standards, experts said. “Having decided to merge the three insurers, will it
Provident Fund Organisation. not be in the owner’s (the government) interest to capitalise the three and keep

EPFO’s Central Board of Trustees, them solvent till the merger takes place? The capital infusion required may be
led by Labour Minister Santosh just some Rs 5,000 crore which is indeed small compared to the Rs 70,000 crore
Kumar Gangwar, has authorised the reportedly given to PSU banks,” said former IRDAI Member KK Srinivasan.
Central Provident Fund Commis-
sioner to implement the move. “The Reliance Capital ends talks with Hero FinCorp on insurer
implementation of the EPF and MP sale
Act, 1952, in the Union Territories of
Reliance Capital has ended talks on sale of its general insurance unit to Hero
Jammu & Kashmir and Ladakh was
Fincorp, according to sources. After the financier struggled to raise funds for
approved by the CBT in its meeting the acquisition, the talks for selling Reliance General Insurance ended, informed
held in Hyderabad on August 21,” the inside sources. Anil Ambani’s group is looking for alternatives for the in-
said Michael Dias, Member, CBT. surance asset including reaching out to other potential buyers, the people said.
The Insurance Times, October 2019 5