The Insurance Regulatory Development Authority (Irda) has turned down a proposal from the Life Insurance Corporation of India (LIC) to set up points of presence under the New Pension Scheme that would have helped in collecting subscription from investors.
“We have not given point of sale presence for LIC this time as it will become a monopoly,” Irda Chairman J Hari Narayan told Business Standard. An LIC executive confirmed the development and said that the company would not push for an approval immediately.
LIC, which has 1.3 million agents and thousands of offices across the country, wanted to be registered as a point of presence. Already, 21 players are registered with the Pension Fund Regulatory and Development Authority, which included the likes of State Bank of India, ICICI Bank, Axis Bank and UTI.
When the scheme was being launched three months ago, Irda issued norms mandating that insurers needed its permission before registering themselves as PoP. Life insurance companies also offer pension plans, but the structure is different.
There is no insurance company on the list of registered PoPs though ICICI Prudential is an approved fund manager. LIC also is a fund manager, but its activity is confined to managing the government pension corpus and had lost out by quoting the seventh highest fund management fee. Both entities have set up separate companies to be fund managers under NPS.
The regulator said the capital requirement of the NPS fund management arm would have to be met by promoter’s money and not from the policyholders’ funds.
They have to ensure that the capital requirement and operating expenses of the subsidiary and any subsequent losses should not impact the policyholder’s money. The investment in the subsidiary should not be considered while calculating the life insurers’ solvency margins, Narayan said.
