Page 12 - The Insurance Times March 2025

curbs, which include mandatory capi- to the Union Cabinet for its approval, Expect insurance mis sell
tal infusion and curtailed incentives for Financial Services Secretary M
top bosses. Nagaraju said. norms soon
RBI has said that it will introduce new
The regulatory crackdown follows a "Finance Minister has already given
sharp rise in commission expenses af- her approval and announced in the guidelines to address mis-selling and
ter the removal of product-specific Budget. Now we will prepare a draft forced selling of insurance. Addition-
commission caps in April 2023. Life in- bill with the help of the law ministry," ally, it has granted regulatory relief to
surers reported a 22% increase in com- he said in an interaction with media banks by postponing proposed regula-
mission payouts, while general insurers here. tions on liquidity requirements, provi-
saw their expenses double in FY24, Thereafter, the draft bill will be sent to sions for potential defaults, and rules
according to the IRDAI annual report. concerning subsidiaries. Instead, RBI
the Cabinet for approval. will adopt a consultative approach be-
Total management expenses in the life fore implementing these regulations.
insurance sector reached Rs. 1.4 lakh The intent of the Department of Finan-
cial Services (DFS) is to get the bill in-
crore in FY24, accounting for 16.94% troduced during the current Budget Insurers submit IPO plans
of total premiums.
session, he said. to IRDAI
In April 2023, the regulator had im-
posed limits on such expenses to curb "This enhanced limit will be available Nine insurers including HDFC Ergo and
for those companies which invest the
competition for market share and im- SBI General have submitted their plans
prove financial discipline. While the entire premium in India. The current for initial public offering to the IRDAI,
new guidelines allow insurers flexibility guardrails and conditionalities associ- following the regulator's push for them
ated with foreign investment will be to get listed.
in managing expenses, over 20 insur-
ers have breached the limit. reviewed and simplified," she had said. The IRDAI had asked 10 large insur-
So far, the insurance sector has at- ance companies, also including Bajaj
Draft Bill seeking 100% FDI tracted Rs 82,000 crore through FDI. Allianz Life, Bajaj Allianz General, Tata

in insurance to be sent to To enhance the FDI limit, the govern- AIA, and Tata AIG General Insurance,
ment will have to bring amendments to submit listing plans by the first week
cabinet to the Insurance Act 1938, the Life of February. While nine have now sub-
The finance ministry will soon send the Insurance Corporation Act 1956, and mitted their plans, one has asked for
draft bill seeking to increase FDI limit the Insurance Regulatory and Develop- time until later this month to submit
in the insurance sector to 100 per cent ment Authority Act 1999. its proposal, the person said.
It will now conduct a review of the
plans before determining the next
IRDAI takes 856 regulatory actions in FY24 steps. Established insurers may take at
IRDAI, took 856 regulatory actions, including penalties against insurers, in least four quarters to complete the
FY24, the government informed the Rajya Sabha. process, while newer players or those
In reply to a question, Finance Minister Nirmala Sitharaman said that IRDAI requiring additional approvals could
regularly monitors insurers through supervisory oversight, such as off-site need six quarters or more, the person
and on-site inspections, to check solvency ratios, governance practices and said.
financial health. The regulator had initially engaged in-
surers in informal discussions before
In her statement, the finance minister said that regular risk assessments
and compliance audits are also conducted by insurance companies as per requesting formal, board-approved
plans. "The IRDAI will now review
IRDAI Regulations.
these proposals, with insurers ex-
Sitharaman noted that if IRDAI has reasons to believe that an insurer car- pected to work towards their IPOs
rying on life insurance business is acting in a manner likely to be prejudicial over the next six months to three years,
to the interests of policyholders, it may, after giving the insurer an opportu- depending on regulatory approvals
nity to be heard, appoint an Administrator to manage the affairs of the and market conditions," the person
insurer under the direction and control of the Authority. said.

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