New Delhi: Insurance sector regulator Irda on Monday said guidelines to allow life insurance companies to raise funds from the capital market will be out by the end of this month.
“They (life insurers companies) will be completing 10 years (in business) later this year. Our IPO guidelines must be in place before that... by the end of this month,” Irda (Insurance Regulatory and Development Authority) chairman J. Harinarayan told reporters on the sidelines of Ficci National Conference on Insurance.
Discussions for allowing listing of insurance companies on the bourses have been going on between capital market regulator Sebi (Securities and Exchange Board of India) and the Irda for nearly three years now.
Under the current Sebi law, companies can get listed on the bourses after they finish 10 years of operations.
The Irda is likely to allow public float by only those companies, which are in the business for at least 10 years and have a track record of three successive years of profit.
Several private sector insurers, including Reliance Life and HDFC Standard Life, have shown interest in tapping the capital market to augment their resource base.
Several of the insurance joint ventures, including Reliance Life, are about to complete 10 years of operations in India, whereas HDFC Standard Life has already completed a decade of business here.
At the moment, besides state-owned Life Insurance Corporation (LIC), 22 private companies are offering life insurance policies.
On the issue of hiking premium rates for motor insurance covers, Harinarayan said that Irda was finalizing the premium rate, which would insulate insurers from the losses.
Insurers have incurred losses of about Rs3,500 crore in the current fiscal on account of motor insurance.
“We have brought out an exposure draft... We will take a call on that shortly... We will finalize on what will be the right level of premium,” he said.
In January, Irda in an exposure draft had proposed a review of motor insurance premium rates for third party liability cover.
The draft, if implemented, will result in a 10% increase in premium for private cars and two-wheelers and up to 80% for goods carriers.
The exposure draft envisages an increase of 10-80% in the premium rates of third party motor insurance.
Third party motor insurance is mandatory for all classes of vehicles. Though regulation of the tariffs in the non-life sector was withdrawn in 2007, third party motor insurance continues to be regulated. The rates were last revised in 2007.