The Insurance Regulatory and Development Authority (Irda) will take a call on altering its ‘Place of Business’ Regulation, which called for insurers to take permission of the regulator to open offices in any location in India. This, is to be in tandem with the Budget proposal to allow insurance companies to open branches in Tier-II cities and below without Irda approval.
Irda, in its gazette notification, on the above regulation has said that the Annual Business Plan of every insurer should have names of places, where offices are intended to be opened. It said that the regulator may grant or deny permission to open branches, in the specified locations in India. The regulator said that if the proposal is denied, the insurer could seek a review of the decision after three months, with valid reasons for reconsideration of the same.
The finance ministry, however, had intended to enhance insurance penetration through setting up of insurance offices in smaller towns, without regulatory approval. “Insurance companies will be empowered to open branches in Tier-II cities and below without prior approval of Irda,” said the finance minister in his budget speech. Irda, in the meantime, has said, that it will reconsider its decision.
“The notification in the gazette was sent, prior to the budget announcement. Hence, we will review our decision and take a call on the same,” said a senior Irda official.
The Irda regulation proposes to make the process, of setting up offices and closure/relocation of offices in India, a structured mechanism. Therefore, in the gazette notification, it has said that insurers should have minimum solvency ratio of 1:50 (or other ratio prescribed, from time to time) for opening a branch in Tier-II cities and below.
Further, it has said that two months advanced notice should be given to policyholders, with the details of alternate arrangements being made to service them.
