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| IPO guidelines for insurance companies by Oct: IRDA |
| Press Trust of India / New Delhi Aug 31, 2009, 16:48 IST |
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Insurance sector regulator IRDA today said it is likely to come out with initial public offer (IPO) guidelines by October.
"We had two meetings with the SEBI and couple of more is required (to decide on final guideline on IPO)," IRDA Chairman J Hari Narayan said at a CII event."If I take optimistic frame probably by October, he said, when asked by when guidelines would be finalised.
There are 22 life insurance firms and 21 non-life insurance companies operating in the country currently.
To facilitate fair valuation of an insurance firm, the regulator is likely to come out with guidelines over the next 15 days.
"Guidance note on valuation has to come from the Institute of Actuaries and this is likely to come in the next 10-15 days."
These will standardize the norms for calculation of embedded value of the companies, he said, adding, once the institute comes out with guidance note then insurance companies have to follow.
IRDA is also working on disclosure norms for insurance companies that will work in the larger interest of the public, he said. Asked whether disclosure norms would come before IPO guidelines, he replied saying "that should seem very logical way of doing it."
He said, "There are two things, one is disclosure for IPO what is called draft red herring prospectus and the other is the disclosure on the systematic basis by listed companies for example their balance sheet details, quarterly or semi-annual disclosure."
Expressing concern over rising claims in the health insurance segment Hari Narayan said, "One thing very striking for the insurance system which we see in India is that the (health) insurance portfolio has got negative claim ratio of 110 per cent."
For the individual health products the claims ratio is around 80-90 per cent whereas for the group it is 120 per cent, he said.
So obviously, he said, group policy management is not as effective as individual policy management.
Noting that the growth of group policy is close to 60 per cent, he said when every other line is loosing their business in terms of growth, the rising number of group insurance is not a healthy trend.
Recognising the importance of engagement with multiple stakeholders in finding solutions to various challenges, he said, there is need to ensure accessibility, affordability and efficiency in the health insurance system of the country.
It requires sustained and focused efforts on the part of all stakeholders in the health insurance eco-system, he said.
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