IRDAI Chairman's Debasish Panda has said that issuance of a composite license will need a change in law, for which discussions are already underway with the government and a decision will be taken at an appropriate time. Though he termed composite licensing not really an obstacle as far as insurance penetration is concerned, he pointed out that in many jurisdictions there is already a method of issuing one license for many kinds of insurance.
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Having put an exposure draft on capping expenses of management, Panda told CNBC-TV18 that the idea is to rationalise expenses on the pricing of insurance products to ensure best prices for the customer, for which a working group comprising of industry and the regulator has already been constituted to rationalise prices.
IRDAI has already examined the report which had recommended a single cap on limit on expenses of management, and has accordingly put out a draft exposure. The draft will be finalised and incorporated into existing regulations after receiving comments.
Panda explained that the finalised draft will enable the insurance industry to have a single limit or cap on expenses of management, where companies will have the freedom to decide on various expenses including commission within the cap.
IRDAI is yet to take a call on mandating agents to put down commission in policy documents, and will decide based on stakeholder consultation and certain recommendations given by a committee on the issue.
The insurance regulator is looking at all possible forms of capital that can possibly come into the insurance industry in order to drive penetration in a fast track way. IRDAI has made certain projections for the next 5 years for the Indian insurance industry which includes catching up with the world average in insurance coverage and lesser protection gap so that each household gets financial protection through insurance.
Panda pointed out several steps taken in this direction, including ease for new entrants in setting up insurance entities and rationalisation of norms for investment and capital coming into the insurance industry. He said that a decision will soon be taken on removal of bottlenecks around private equity investments into the insurance market.
IRDAI is currently in discussions with stakeholders and is evaluating pros and cons of whether private equity investments in insurance companies should be allowed only via SPVs. As IRDAI nudges insurance companies to get more capital and many plan to get listed, Panda added that getting listed will provide not just capital but also increase transparency of insurance companies, which will be valuable for policyholders as well as shareholders in the long run.