Not ready, plead insurers on compulsory listing

Insurers are sending their views through their councils, asking that this be made optional

Insurance companies are apprehensive about the mandatory listing proposal by the sector regulator once they have completed a certain number of years.

Insurers are sending their views through their councils (life and general), asking that this be made optional.

A discussion paper of the Insurance Regulatory and Development Authority of India (Irdai) has proposed directions for general insurers (including health and reinsurers) to take steps to get their shares listed on the stock exchanges after completing eight years of operations. For life insurers, this is proposed at 10 years.

"When we entered the industry, we were not asked to mandatorily list after a certain number of years. In several cases, both the Indian and foreign partners are not ready for this," said the chief executive of a mid-sized private life insurer.

Irdai proposes that all insurers that have already exceeded the number of years of operations must get their shares listed within three years from the date of issue of the new guidelines. It notes 32 companies in the life, general and reinsurance segments have completed eight to 10 years of operations but only two of these, both life insurers, have applied for getting their shares listed.

There is already a proposal by the government to list the public sector general insurers.

Life Insurance Corporation of India will be out of these norms, since it is governed by a separate Act.

In an earlier guideline, Irdai had said it could direct an Indian insurance company to list on the stock exchanges if the circumstances so warrant. Also, that such a company, within a period of one year from the date of such directions, must comply with these directions.

At the end of July, there were 55 insurance companies, of which 24 are in life insurance and 30 in non-life, and one reinsurer. In life insurance, 16 companies have completed 10 years of operation; in general insurance, 12 have completed 10 years. In health insurance, only one company has completed 10 years.

Irdai said public listing enables retail (small) and institutional investors to participate in the fortunes of a company. Till now, only one initial public offering of equity has been announced in the sector, of ICICI Prudential Life Insurance.