IRDA to come out with IPO norms by Feb-end

Insurance-sector regulator, IRDA is planning to come out with the IPO guidelines for insurance companies by the end of next month, a top official said.

"We are awaiting Institute of Actuary’s guidance note on Economic Capital calculation. Once that is done, we will be in shape. We will come out with the IPO guidelines by February end," Insurance Regulatory Development Authority (IRDA) Chairman J Hari Narayan told reporters on the sidelines of an insurance conference organized by Ficci here today.

Economic Capital (EC) refers to a level of capital that a firm should maintain to support its strategic objectives, taking into account the nature and extent of the risks it is running.

On the introduction of derivatives kind of instrument for insurance companies, Hari Narayan said it would not be appropriate to introduce such an instrument unless a company has knowledge about it.

"Unless there is a system where top management of a company is fully aware of how its investment portfolio is behaving in terms of regulatory compliance, safety and asset liability management, I don’t think it is appropriate to introduce such measures," he said.

For derivatives, insurance companies must have robust system of examining and managing their investment portfolios, he said.

Hari Narayan also said that the business of natural calamities (natcat) is another important area for insurance companies.

"We are in the region where calamities such as Tsunami, earthquakes, fire hazard occur frequently but we are ill-prepared for meeting these kinds of contingencies. We have much to do in this area," he said.