Insurance working group to look at allowing 'IMF' in India

India's insurance regulator Thursday said a working group it set up would explore the possibility of introducing a stand-alone insurance marketing firm (IMF) and other related issues.

By an order Jan 20, the Insurance Regulatory and Development Authority (IRDA) formed an 11-member working group comprising of officials from life and non-life insurance companies to recommend to IRDA on the capital required for the IMF; geographical spread of operation; and distribution costs/remuneration/incentives to be paid to IMF, among other issues.

According to IRDA, the idea of IMF has its source in a committee set up by it in 2007 to look into the insurance distribution channels.

The committee chaired by Life Insurance Corporation of India's (LIC) former chairman N.M. Govardhan had submitted its report.

The IRDA held meetings with life and non-life insurers on the IMF Jan 16 and 17 and decided to set up the working group.

This is the second group/committee set up by IRDA relating to insurance intermediaries this month.

On Jan 12, the IRDA set up a committee to study the option of allowing 100 percent foreign direct investment (FDI) in insurance intermediaries, third-party administrators (TPA), surveyors and loss assessors.

Currently the FDI limit for these entities is 26 percent in line with the limit stipulated for insurance companies.

The 10-member committee would study whether there is a case for increasing the FDI limit in insurance entities (other than insurance companies) and, if yes, to what extent.

The committee will also look at the implications of modifying the limit on the industry and the international practices.

According to IRDA, it has been receiving representations from various stakeholders to permit increasing FDI limit to 100 percent from 26 percent as this measure needs amendment to its own regulations and not any law.