Page 8 - Insurance Times September 2021

IRDAI News

IRDAI to call for re-pricing rates. "There has been some discussion, addressed to the Reserve Bank for con-
but we are still waiting for further di- sideration in consultation with the In-
of policies
rections," he said. surance Regulatory and Development
Amid mounting losses facing general Authority of India (IRDAI)," to ensure
insurers, the insurance regulator is un- IRDAI will vet for FDI in that the foreign investment limit is not
derstood to be examining the proposal breached, the notification said.
to increase the premium for Covid-spe- bank-led insurance
cific cover, but a decision is yet to be Applications for foreign direct invest- Finance Ministry explores
taken. ment in an insurance company pro-
moted by a private bank would be insurance bonds as alter-
According to sources close to the de-
velopment, the Insurance Regulatory cleared by the RBI and IRDAI to ensure native
and Development Authority of India that the 74% limit of overseas invest- The government is considering to intro-
ment is not breached.
(IRDAI) is set to call a meeting of the duce insurance bonds as an alternative
actuaries to further discuss the issue of The changes took effect following to bank guarantees, Finance Secretary
re-pricing of Corona Rakshak and Co- amendments to the Foreign Exchange T V Somanathan said. Somanathan
rona Kavach policies. Management (Non-debt Instruments) made the announcement during a meet-
Rules, 2019, as per the gazette notifi- ing between industry captains and Fi-
Non-life insurers, which had earlier also
cation issued by the Finance Ministry nance Minister NirmalaSitharaman,
made a representation to increase the
premium for these policies, have now on August 19. who is on a two-day visit to the finan-
cial capital. "Government is exploring
pointed to their Q1, saying it is difficult "These rules may be called the Foreign
on instituting insurance bonds as alter-
to survive without a hike in the rates of Exchange Management (Non-debt In-
natives to bank guarantees," an official
these policies. "Non-life insurers are struments) (Second Amendment) Rules,
statement said. Bank guarantees are
bleeding on the back of huge claims on 2021," it said.
usually asked for while extending a loan
health covers due to Covid. The com-
In March, Parliament passed a bill to and typically require a collateral.
bined ratios of many private sector gen-
raise the foreign direct investment (FDI)
eral insurers are as high as 125 per cent. limit in the insurance sector from 49% An insurance bond is also a surety but it
does not require any collateral. Recom-
"A review of the rates of these policies to 74%. The Insurance Act, 1938 was
mended by As per reports last year, in-
is much needed, especially since their last amended in 2015, raising the limit
surance regulator Irdai was also look-
premium is so low," noted the head of a to 49%, resulting in foreign capital in-
ing at the option of insurers offering
general insurance company. flow of ?26,000 crore over 5 years. surety bonds in the context of road
Another insurance executive said com- "Applications for foreign direct invest- projects. Sitharaman, who met the in-
panies are awaiting further word from ment in private banks having joint ven- dustry captains in the evening, said the
the IRDAI to come out with revised ture or subsidiary in insurance may be government is committed to working

8 The Insurance Times, September 2021