A notification on Initial Public Offering (IPO) norms for insurance companies is expected anytime soon, as the Securities and Exchange Board of India (Sebi) has already finalised the guidelines framed by the Insurance Regulatory and Development Authority (Irda).
“We are awaiting publication of the gazette notification by the government. It will happen very soon. The norms have been already finalised by Sebi,” said Irda Chairman J Harinarayan here on Tuesday.
The insurance regulator had issued draft IPO guidelines in June, this year, and referred the same to Sebi after making a few changes, based on the industry feedback.
In its draft guidelines, Irda made it mandatory for companies to complete 10 years in existence, apart from having strong financials, satisfactory regulatory record and prescribed regulatory margins at the end of the preceding six quarters, among other parameters, to get the regulator’s approval to raise money from markets.
Though the insurance regulator is the sole authority to either accept or reject the application of any insurance company seeking to go public, they have to further fulfil the general listing norms mandated by Sebi under the ICDR (Issue of Capital and Disclosure Requirements) Regulations — 2009. Besides being subjected to the Reserve Bank of India’s approval if the public offer also involves foreign direct investment (FDI) norms.
“It is good to have price discovery but it will happen gradually. It is a journey of three to five years,” said Sandeep Bakshi, managing director of ICICI Prudential Life Insurance Company, responding to the Irda chairman’s announcement.
Speaking to media on the sidelines of the Institute of Insurance and Risk Management’s (IIRM) graduation ceremony, Harinarayan also said the recent decline in the rate of growth in premium collections by insurance companies had a correlation with the overall economic growth. “In fact, the growth in premium corresponds with economic growth in a 1:1 ratio,” he said. However, it was too early to say whether the drop in sale of unit linked insurance policies (Ulips) was on account of policy changes effected in this regard by Irda.
On third-party motor pool, Harinarayan said discussion had to take place before making any changes in the present regime. “It is not that the pool price would be reduced. That would continue.” He said demand and supply in the third party motor pool was evenly balanced.
On new joint venture (JV) proposals in the sector, he said Irda had received a few proposals. The regulator recently issued R1, the first stage of licence, to the Liberty and Videocon JV.
Also, the regulator saw no issues with single premium products as long as there was a fine balance between single and multiple premium products in terms of the overall business they account for. On health insurance portability, the number of applications was notlarge, according to him.
