By placing rigid norms for life insurance companies which wish to act as points of presence (PoPs) under the New Pension Scheme (NPS), the Insurance Regulatory and Development Authority (Irda) has dashed the dreams of even non-life insurers who wanted to act as pension fund managers (PFMs).
According to a recent circular, Irda said that life insurers can set up a 100-per-cent subsidiary with prior approval from the regulator.
Moreover, Irda said that the capital for the subsidiary should be met by the promoters of the insurance company and this investment should not be considered for the purpose of calculating solvency margins. Further to this, the regulator added that the investments should be held as non-admitted assets in the accounts of the insurer. For the purposes of preparation of the financials of the insurance company, the investment should be carried at the book value of the subsidiary.
In order to protect the interest of the policyholders, the regulator said that, in case a pension fund manager is asked to manage guaranteed products by its subsidiary under the scheme, it will have to take prior approval.
“In case of any extraordinary lapses and contingencies that affect the interests of the subscribers, the resultant losses would be funded through the shareholders’ accounts of the insurance company. In effect, the promoters of the insurers would meet all such losses,” Irda said.
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