The insurance regulator today expressed its reservations on the entry of cooperatives in the business, even as the Insurance Amendment Bill, 2001, seeking to permit cooperatives in the sector, is pending with the parliamentary standing committee.
Speaking at the sixth international conference on insurance organised by Federation of Indian Chambers of Commerce and Industry (Ficci), Insurance Regulatory and Development Authority (Irda) chairman N Rangachary said the cooperatives have intrinsic difficulties and they have received adverse criticism for their involvement in the recent stock scam.
"They neither have financial reach nor management richness to run insurance companies," Rangachary said. He, however, added that since the government had decided to permit cooperatives into the sector, the insurance regulator would prescribe the same equity, solvency and other norms as is applicable to corporates.
The Irda chairman also said he had spoken to insurance companies to fall in line with norms prescribed by the regulators. He said, in an attempt to garner as much marketshare as possible, insurers had at times diverted from the prescribed guidelines.
Rangachary also said that Irda has convened a meeting of Reserve Bank of India officials and bankers to finalise the norms for bancassurance to improve insurance penetration in the country.
The norms are expected to be firmed up by November. The move comes in the wake of Irda's efforts to increase insurance penetration in the country from the meagre 2.1 per cent of the GDP at present.
Considering the stringent provisions for brokers and agents, which were coming in the way of increasing sales of insurance products through banking channels, Rangachary said the regulator was considering changes in section 42 of the Insurance Act which prescribed mandatory 100 hours training for all directors of insurance and distribution companies.
On opening up of pension business, the Irda chief said the regulator would submit its report on the spread of pension cover in the private sector to the ministry of finance by October-end.
He also said the health insurance was yet to pick up as no company intended to set up a stand-alone subsidiary only for this sector. Moreover, he said the country lagged in terms of standardisation in hospital services, discouraging insurers to come forward.
Rangachary said the Indian Medical Association (IMA) has also a separate group of officials from various ministries and Irda functionaries are at present involved in working out the standards.
In this context, he said third-party administrators in health sectors should act as responsible intermediaries and influence hospitals to improve their services.
