Page 10 - The Insurance Times August 2022

and benchmarks criteria as specified by Rs 2 trillion to over Rs 11 trillion, and as
IRDAI cautions insurers
their respective boards.'' a result increase the general insurance
against loading up on
penetration. To achieve this, they are
The objective is to enhance the scope
looking at making a lot of regulatory bonds of HDFC Cos
for offering cashless facilities across the
changes. The regulator has given indi-
country, according to the authority. India's insurance regulator has advised
vidual targets to companies based on insurers against loading up on the bonds
"While specifying the criteria, the board
their growth and various parameters.
of HDFC Group companies, saying de-
of insurers shall, consider the minimum
The only reason to prescribe targets is
tails on permitted exposure thresholds
manpower and healthcare infrastruc-
to increase penetration. The idea is that
must await the effective amalgamation
ture facilities," it said.
coverage should be improved substan-
date for what's billed as the country's
The board-approved empanelment cri- tially," said a private sector general ex- biggest merger.
teria should be published on the ecutive, who is aware of the develop-
Early April, mortgage lender Housing
websites of the insurers from time to ment.
Development Finance Corp (HDFC) pro-
time.
posed the merger with HDFC Bank. Af-
Finance Ministry asks
"While empanelling network providers ter the announcement, insurers wrote
for cashless facilities, insurers are also to their regulator IRDAI on the permit-
CPSEs to ease PSU insur-
advised to focus on the delivery of qual- ted exposure limits in the individual en-
ers' solvency criteria
ity healthcare services," the IRDAI said. tities.
These instructions have come into force The Finance Ministry has asked Central
"IRDAI shall be issuing necessary in-
with immediate effect. Public Sector Enterprises (CPSEs) and
structions on applicability of exposure
government departments to relax the
norms only after the announcement of
requirement of minimum solvency ra-
IRDAI gives indicative pre- the effective date of the merger,"
tio of 1.5 of the liabilities as one of the
mium growth targets to eligibility criteria for the participation IRDAI said in its note to the insurers. ET
has seen a copy of that note.
non-life insurance compa- of public sector insurance companies in
Some investors were seen buying bonds
the tender process.
nies of the HDFC Group, anticipating regu-
According to an office memorandum by
The IRDAI has prescribed aspirational latory clearance that could open up
the ministry to various departments
targets for non-life insurance industry, additional limits on the holdings in indi-
and insurance firms, the stipulation on
days after doing the same for life insur- vidual companies. The regulator ap-
high solvency ratio makes three of the
ance companies. The aim is to increase pears to have advised insurers against
four public sector general insurance
the general insurance penetration to such a practice.
companies (PSGICs) - National Insur-
2.52 per cent by FY27 from the current "Investment committees of insurance
ance Company Ltd (NIC), Oriental In-
1 per cent as of FY21, according to companies are hereby advised to take
surance Company Ltd (OIC) and United
sources. note of the above (the reference to the
India Insurance Company Ltd (UII) - in-
effective merger date) and take further
The regulator wants to increase the
eligible to participate in the tender pro-
exposure to the above entities consid-
general insurance premiums to Rs 11.7
cess in spite of their "vast experience
ering the proposed amalgamation with-
trillion by FY27 from Rs 2.2 trillion as of
and risk management skills".
FY22. In FY22, the non-life insurance out pre-empting any regulatory relax-
The Ministry's note follows the intense ations for complying with extant regu-
industry premiums grew by just 11 per
competition in the sector and the de- lations applicable to exposure norms,"
cent over the previous year, data put
cline in the performance of three PSU IRDAI said in the note bearing the sub-
out by the regulator showed.
insurers. Only New India Assurance ject line "Merger of HDFC Ltd and HDFC
According to the IRDAI's annual report,
Company Ltd has reported a solvency Bank Ltd - Reg."
as of FY21, non-life insurance penetra-
ratio of more than 1.5 among the four
tion in the country is just 1 per cent (see
PSU insurers. Government departments IRDAI in favour of insurers
box). Insurance penetration is mea-
and CPSEs, which constitute a big mar-
sured as a percentage of GDP. in SLBC
ket for insurance companies, award in-
The Insurance regulator has proposed
"The regulator has a vision to see the surance contracts through a tender pro-
the involvement of insurance compa-
general insurance market growing from cess.
10 The Insurance Times, August 2022