Investment norms for insurance sector to be eased

FM announces 12-point action plan to revive life sector

Finance Minister P Chidambaram today announced a revival package for the life insurance sector. It includes easing investment norms for the companies, faster clearance for new products, easing of procedures, and allowing banks to sell products of more than one insurance company among other.

Addressing reporters today, the finance minister also agreed to address tax-related issues of the insurance companies such as reduction in service tax, tax treatment of annuity products on par with the New Pension Scheme and Tax Deducted at Source on commission payments made to agents.

At present, there is a stipulation that 75% of investments in debt should be in AAA rated instruments. These do not include investments in government securities and other approved securities.

“Irda will consider relaxing the stipulation and provide that the minimum requirement of 75% in AAA instruments would apply to debt investments including government securities and other investments… This is expected to release a space of 12.5% for investments in less than AAA rated debt instruments,” Chidambaram said.

The insurance regulator will also introduce a system of ‘Use & File’, against the current practice of ‘File & Use’. This means it will design some standard products for the industry to use without seeking Irda approval provided the product fulfills the stipulated conditions.