Search the Internet          Tips  Sites: Finance, Investment

IRDA to say sayonara to New Delhi, but not to reforms

Paving the way for a new paradigm, the Insurance Regulatory and Development Authority will bid sayonara to New Delhi this year but not to reforms, which is intended to make Indian insurance market comparable with the best in the world.

Although IRDA will shift its headquarters to Hyderabad early next year, it has framed most of the guidelines within a record time of less than 18 months. IRDA also fine-tuned the Old Age Social and Income Security scheme suggested by Dave committee and prepared the grounds for pension reforms.

In 2002, IRDA will be coming up with norms as suggested by International Association of Insurance Supervisors to make Indian insurance industry sync with the world.

As spelt out by Finance Minister Yashwant Sinha, IRDA's future course of action would be to strengthen regulatory system, develop a code of good practices, improve corporate governance and financial accountability, ensure high solvency margins of companies, ensure timely and reliable data while strengthening market structure.

The reforms would build upon the corner stone already laid down by IRDA. But what were IRDA's achievements in 2001?

While crystal-gazing 2001, one witness IRDA moving away from "licence raj" era and giving approval to Reliance General, HDFC Standard Life, Royal Sundaram, ICICI Prudential Life, ICICI Lombard General, Max New York Life, IFFCO Tokio Marine, Birla Sun Life, SBI Life, OM Kotak Life, Tata AIG (life and non-life), Metlife, Bajaj Allianz (life and non-life) and ING Vysya Life.

Reliance Life, Dabur CGU and AMP Sanmar have obtained "in principle" approval while proposals of Sahara Life and ECGC are under consideration.

In the pipeline are proposals from Murugappa Group, PNB and Nabard. Within the next two-three years, Indian insurance sector is expected to be abuzz with at least 25 companies.

So India's life insurance sector, which was afloat on the strengths of Life Insurance Corporation till a year ago, is now dotted with all the major names of Indian and global financial world.

LIC may claim, "We know India Better". But companies like Prudential ICICI Life, HDFC Standard Life, Max New York Life and ING Vysya have within a short time proved the notion: "We can serve India better". LIC, however, is unfazed by the competition and boasts a 50 per cent growth in business after the liberalisation.

General Insurance Corporation, which has transformed into the Indian Reinsurer, has also spread its wings overseas. It is in the process of tying up with Asian Reinsurer like China Re, to strengthen reinsurance market while eyeing other markets through its tie up with Russian reinsurer Ingostrak.

The trend in domestic general insurance sector is somewhat different as the new generation insurers are breathing over the shoulders of PSU insurers.

Despite the aggressive growth, the initial glee of private insurers is fading away on the fear of heavy capital infusion required in the initial years of an insurance business, which may put strain on the Indian partners.

Foreign partners demanded hike in foreign direct investment limit to 49 per cent from present 26 per cent.

ALSO READ:
The Year That Was