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Insurance regulator to limit application time to 3 months for private companies

The Insurance Regulatory and Development Authority will seek applications for insurance ventures from private companies for a limited period of three months during July-September 2000, B K Chaturvedi, special secretary, insurance, said today.

IRDA will thereafter close the ''window for seeking applications'' till an undisclosed period, Chaturvedi said.

Although the companies who bagged the licence in the first tranche would have an edge, it would give IRDA an opportunity to choose serious players, Chaturvedi said.

The three-month restriction for submitting applications would compel prospective players to come up with sound business plans, he said.

Chaturvedi expressed hope that several banks who are restricted by RBI guidelines to enter the insurance sector would resolve the tangle with the central bank before July 2000.

Observers fear that the limited period opened for submitting licences could scotch chances of several Indian banks willing to enter this lucrative business following tough RBI guidelines for their entry into the insurance sector.

The central bank has stipulated that the bank should have a net worth of Rs 5 billion, one per cent lower NPAs than the industry standard and ability to invest a minimum of Rs 1 billion into the venture.

IRDA will be statutorily constituted by March 15, Chaturvedi said, adding it may have three to four members, including the chairman, at the time of notification.

IRDA will be a lean and thin organisation having only six members including the chairman.

He said the advisory committee with a maximum of 25 members will be set up immediately after IRDA is constituted.

IRDA will notify the draft regulations on the recommendations of the advisory committee.

The first licences will be given before the end of year. ''There will be no going back, no slip up in this schedule,'' he added.

The draft bill of the actuaries will be introduced in Parliament in six months to one year time. ''The bill is likely to be submitted in Parliament in the monsoon session or one after that,'' he added.

Chaturvedi said the profession of actuaries would gain from opening up of insurance as even IRDA will be involving them in monitoring and assessment of the risk profile and pricing of insurance instruments.

UNI

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