Page 12 - Insurance Times December 2022

IRDAI proposes allowing Doing away with the minimum capital
Go Digit: IRDAI no to
requirement of Rs 100 crore would al-
insurers to invest in un-
Fairfax proposal for low entry of small, specialised and niche
listed firms players, which would help in increased
CCPS conversion
insurance penetration and density in
India's insurance regulator has proposed
IRDAI has rejected its proposal to the country.
to the government that insurers be al-
convert the GO Digit's holdings in
lowed to buy over 10% of unlisted firms "Like in the banking system, we have
compulsory convertible preferred
without approval, regulatory and indus- microfinance institutions, regional
shares (CCPS) issued by Go Digit
try sources said, a move that could un- banks, and small finance banks. So, we
Infoworks into equity shares.
lock new funding avenues for startups in have all categories of banks then there
Go Digit Infoworks Services, based Asia's third largest economy. Currently, are non-banking financial companies. In
in Pune, is the parent company of IRDAI does not allow insurers to invest in the insurance sector also, we should
Go Digit Insurance. Fairfax currently unlisted entities without its permission. have different size players to come into
owns 45.3 per cent of Go Digit the market so that they can operate in
IRDAI has sent a proposal to the gov-
Infoworks, which has an 83 per cent smaller geographies," IRDAI Chairman
ernment to allow buying a more than
stake in Go Digit General Insurance. Debasish Panda said in an interview.
10% stake in unlisted firms by insurers,
The Fairfax proposal would have in- using over 10% of the monies lying in Entry of smaller and specialised players
would help in increasing insurance pen-
creased its stake to 74 per cent from their shareholders fund, policyholders
etration and density, he said.
49 per cent in Go Digit General In- fund, or funds maintained by a reinsur-
surance, which is engaged in the ance company, according to the two "So, in this context we are suggesting
general insurance business in India. sources, who requested anonymity. to the government to look at the exist-
Fairfax is expected to make a gain ing provisions and see whether you
"The finance ministry is considering
of approximately $375 million when could remove the Rs 100 crore cap mini-
IRDAI's suggestion, and is looking to
it achieves majority ownership of make the changes in the law," one mum requirement. The regulator can
Digit. source said. frame the regulations based on the size
of the company that they (promoters)
"In June 2022, Digit Insurance and
are going to set up. For the micro insur-
Fairfax Financial Holdings applied to IRDAI seeks to ease entry
ance company it may be X amount, re-
the IRDAI for approval to convert
capital gional companies operating in a bigger
the company's holdings in compul-
The IRDAI has suggested the govern- larger geography could be Y amount,"
sory convertible preferred shares
ment to ease the minimum capital re- he said.
issued by Go Digit Infoworks into
quirement of Rs 100 crore and permit Going forward, he said, the relaxation
equity shares of Go Digit Infoworks,"
the regulator to fix the amount depend- in capital requirement would help in
Fairfax Financial Holdings said in a
ing upon business plans of the prospec- creating specialised or a mono line for
note.
tive company. segments like motor and properties.
The Insurance Times December 2022 11