Foreign insurance companies would not be allowed to do business in the country directly or through subsidiaries, Insurance Regulatory Authority of India (IRAI) chairman N Rangachary said here yesterday.
Addressing an international conference on insurance reforms organised by the Confederation of Indian Industry (CII), he said only Indian insurance companies would be allowed to do business in the country. However, foreign companies may be permitted to pick up equity stakes in local companies, he added.
These moves were part of the proposed reforms in the insurance sector over the next few months, he said. Rangachary said where insurance companies were on a joint venture basis, the promoters' share would not be allowed to be transferred without approval from the IRAI.
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Other reforms being contemplated include a tough licensing regime. Companies will have to submit applications to the IRAI for licences to provide insurance services. Rangachary said there would be no restriction on the number of entrants in the insurance business. However, companies would have to start business within 10 months of being licensed and conform to the business proposals submitted by them. If a company cannot start operations within the stipulated time it will have to surrender its licence.
"There will be no trafficking in licenses," he emphasised.
He also said there would be no composite licence for companies; applicants would be segregated into either life insurance or general insurance.
IRA's powers will include prescribing capital adequacy and solvency ratios for insurance companies and pricing of insurance products. "We will not allow any form of under-pricing of insurance products," he said.
The government is considering an ombudsman in the insurance sector on the lines of the banking ombudsman. A decision on this would be taken soon, Rangachary added.