Irda clearance for IDBI-Fortis JV

The Insurance Regulatory and Development Authority (Irda) has accorded the first stage of clearance to IDBI-Fortis Life Insurance, a joint venture of Industrial Development Bank of India, Fortis Insurance International of the Netherlands and the Kerala-based Federal Bank.

"The final clearance is in an advanced stage of consideration," Irda chairman CS Rao told Business Standard.

The IDBI, along with Fortis and Federal Bank, has formed the life insurance joint venture to tap the growing market for life insurance products in India.

According to Rao, growing economy and burgeoning middle-class in the country offer wide potential for the insurance sector. In this context, he pointed out that insurance penetration as a percentage of GDP has increased from 2 to 4 over the last eight years.

On the criticism that the healthcare insurance, as it exists today, was making hospital treatment expensive, he said it was time for the insurance companies and hospitals to work together to see how best they would be able to reduce the costs. He also said one should realise that medical science was advancing and the advanced diagnostic facilities and treatment were also adding to the costs.

Regarding the second phase of detariffed insurance (that allows insurance companies to offer unique products), Rao said Irda had no objection in advancing it "provided the insurance companies are ready".

The second phase, which was scheduled to begin on April 1, 2008, had been sought to be advanced by three months to January 1.

Talking about the road map ahead, Rao said Irda would like to strengthen both the life and general insurance councils.

"We would like them to become active so that the insurance companies resort to self-regulation and develop a code of conduct for their members."

Irda, on the other hand, would strive to create greater awareness among the consumers regarding insurance in general and what should be looked into an insurance policy in particular.

He said a major complaint received by the regulatory body from the consumers was that all the risks involved in a policy were not being explained by an insurance company or its agent.