Insurance Regulatory and Development Authority (Irda) will not further tighten norms for insurance companies in which foreign firms hold stakes as the global financial turmoil will not impact them, an official at the regulatory agency said.
“There is no need to review solvency margin... The solvency margin prescribed is very much adequate,” Irda Member R Kannan said.
The regulator had sought certain information from private insurer Tata-AIG after the foreign joint venture partner AIG ran into financial trouble in the United States last week. AIG has a 26 per cent stakes in each of the two life and general insurance ventures with India's Tata group.
Kannan said all the private insurers are well-positioned and are maintaining an adequate solvency margin, which means assets were well above liabilities.
The insurance law requires companies to maintain a solvency margin of 150 per cent, which some companies say are very high, he added.
Irda is likely to issue a roadmap by March next year to move to a risk-based capital structure for Indian companies.
“Risk-based capital framework will ease capital requirement of Indian insurance companies,” Life Insurance Council secretary general S B Mathur said. There is no need for 150 per cent solvency margin in the case of funds related to conventional insurance products, which are mostly invested in government securities.
On a separate issue, Kannan said Irda will give sufficient time to state-run Life Insurance Corporation to bring down its equity exposure in some companies to 10 per cent from 20 per cent. "It is an issue on which we are in touch with LIC and we may give them sufficient time. We do not want forced sale so that LIC offloads shares in the market and get lower returns on investment," Kannan said.
