Irda mulls more instruments for insurers

Insurers would soon get more flexibility and more number of instruments to invest in. The Insurance Regulatory Development Authority of India (Irda) is considering inclusion of mortgage-backed securities, infrastructure securities and investments in initial public offers (IPOs) in approved investments.

C R Muralidharan, member (Life), Irda, said, "We are considering making certain changes in the insurance regulations to give more flexibility to insurers without taking recourse to legislative amendment."

He was talking on the sidelines of a seminar on the insurance industry organised by ICICI Securities and Fox Pitt Kelton.

"Infrastructure securities match the investment requirements of insurers as they offer good yield, have lower defaults and are long term in nature," he added.

Investment norms for insurers are laid down in the insurance legislation. Current norms allow insurance companies to invest up to 35 per cent in approved securities and 15 per cent in other-than-approved investments for traditional products. At present, mortgage-backed securities are considered other-than-approved investments.

The Working Group on investment regulations, which was constituted by Irda in June last year to examine the existing investment norms, has suggested these changes.

At present, there is a 35 per cent cap on investments in equities for traditional life insurance funds (endowment, whole life).