Irda For Fortnightly Review Of Cos Health

The Insurance Regulatory and Development Authority (IRDA) is likely to review the financial performance of insurance companies every fortnight. Companies will also have to mandatorily disclose results on the Internet, to ensure that there is no default in the initial years.

A guideline on the financial disclosure will be soon issued to registered companies by the regulator along with other norms pertaining to solvency and brokers margin required to be maintained by them.

"The financial performance of insurance players would be reviewed 'periodically'-- it could be quarterly or monthly.

Depending on the financial health it could even be done after every fortnight," IRDA chairman N Rangachary said.

The move for keeping a regular vigil on the financial performance of new companies was felt at the outset of the risk involved in the insurance business and ensuring that the interests of the consumers are protected.

The IRDA would also carry out the duties of the disbanded Controller of Insurance in India, from now on as it was merged into the authority.

The Securities and Exchange Board of India (Sebi) made quarterly disclosure of financial results mandatory for listed companies on the same ground of increasing transparency.

Rangachary said the IRDA would also make it mandatory for companies to use Internet for disclosing financial results on a regular basis. "We are developing a software which would have the format for disclosing the relevant financial parameters," he said.

The use of Internet was felt necessary to speed up the monitoring process without having to set up offices in major metros where the companies are centered.

The IRDA is very much short of staff and it might not be possible for the officials to run around the country for monitoring the companies, Rangachary said.

He said the regulator will ask companies to maintain an absolute solvency margin (total assets divided by total liabilities) of 1.5 per cent in order to ensure a strong financial health. On the pending legislations, Rangachary said the norms for reinsurance of life insurance schemes would be made available by December this year.

So far, 12 companies have applied for insurance licence. Reliance General Insurance, HDFC-Standard Life and Royal-Sundaram Sunalliance-- were granted the licence on the eve of Diwali, while ICICI-Prudential Life, Iffco-Tokio Marine and Max-New York Life were given "in principle" permissions.

Rangachary said the next batch of licenses would be given any time between December and January.