After a slew of reforms in the multi-brand retail and aviation sectors, the government is now planning to give a big boost to the domestic insurance sector.
After a meeting with the chairman-cum-managing directors and chief executive officers of insurance companies last month, Finance Minister P Chidambaram on Monday announced a raft of measures, including easing investment norms for the companies, faster clearance for new products, easing of procedures, and allowing banks to sell products of more than one insurance company among other.
“A number of steps that would be necessary and desirable to give a fillip to the life insurance industry and expand the spread and penetration of life insurance were identified and agreed upon during the discussions,” he said.
In a bid to encourage investments into infrastructure sector, Chidambaram said the regulator, IRDA, will allow investments in an infrastructure special purpose vehicle floated by any company where the SPV is a wholly-owned subsidiary of the parent company and the debt instrument issued by the SPV is guaranteed by the parent company.
He also announced that the insurance regulator will consider relaxing the current rules that require 75 per cent of investments by insurance companies in debt instruments, excluding government securities and other approved securities, should be in AAA rated instruments.
“IRDA will consider relaxing the stipulation and provide that the minimum requirement of 75% in AAA instruments would apply to debt investments including government securities and other investments...This is expected to release a space of about 12.5 per cent for investments in less than AAA rated debt instruments.”
On bancassurance, Chidambaram said IRDA will frame rules that will allow banks to sell products of more than one insurance company.