Insurance Regulatory and Development Authority (Irda) will not further tighten norms for insurance companies in which foreign firms hold stakes, as the global financial turmoil isa unlikely to impact them, an official at the regulatory agency said.
“There is no need to review the solvency margin... The prescribed margin is adequate,” Irda Member R Kannan said.
The regulator had sought certain information from private insurer Tata-AIG after the foreign joint venture partner AIG ran into financial trouble in the United States last week. AIG holds a 26 per cent stake in each of the two life and general insurance ventures with the Tata group. Kannan said all the private insurers are well-positioned and currently maintain an adequate solvency margin, which means assets were well above liabilities.
The insurance law requires companies to maintain a solvency margin of 150 per cent, which some companies say is very high, he added.
Irda is likely to issue a road map by March next year to move to a risk-based capital structure for Indian companies. “Risk-based capital framework will ease capital requirement of Indian insurance companies,” Life Insurance Council Secretary General S B Mathur said.
On a separate issue, Kannan said the Irda would give sufficient time to state-run Life Insurance Corporation (LIC) to bring down its equity exposure in some companies to 10 per cent from 20 per cent. “It is an issue which we are discussing with LIC and we may give sufficient time. We don’t want forced sale so that LIC may offload shares and get low returns.”