Industry experts said that the main reason for the Irda's concern was that there was a lack of information and proper disclosures from FIIs routing funds through tax haven route. "Complete compliance to regulations is required. It has been noticed that certain players do not make full disclosures of their financial situations in other nations and losses suffered due to this to the Indian regulator. Hence, the concern is justified," said an insurance company's chief investment officer.
Another official of a private life insurance company added that the exit of certain foreign players from the Indian insurance industry could have promoted the regulator to take this stand.
Irda sources said that the regulator would take a final call when fresh applications for such investments would be made by insurers. However, sources also added that it is unlikely that such proposals would be reviewed on a case to case basis in the future.
Ashvin Parekh, national leader, global financial services, Ernst and Young explained that though there could be a concern from the industry on shunning of funds from these destinations, the regulator was trying to protect the policyholders' interest through their views on inflows from these nations.