Irda Mulls Protection Funds For General, Life Policies

The Insurance Regulatory and Development Authority (Irda) is proposing to set up two separate policyholder protection funds for general and life insurers with the companies being asked to contribute 1 per cent of their profit to the fund.

Irda chairman N Rangachary said here today that the guidelines for policyholders protection, including setting up of the two funds are currently under formulation and will be finalised over the next two months.

The norms on the entry of third-party administrators in health insurance would also be finalised within two months.

The Irda chief also ruled out the possibility of an increase in the foreign investment limit beyond the present 26 per cent.

 

He said that there would be around 25 insurance companies operating in India by the end of the current financial year.

An amendment to the Insurance Act, allowing the entry of brokers in insurance, is also expected to be cleared in the monsoon session of parliament while a bill on actuary has been referred to the cabinet, Rangachary said on the sidelines of a seminar organised by the PHD Chamber of Commerce and Industry.

On the legislations on brokers and agents, Rangachary said Irda has stipulated 15 per cent commission for agents and 17.5 per cent for brokers in general insurance sector while it would be 35-40 per cent of first premium income for life insurance agents.

Ajit Mohan Sharan, joint secretary in finance ministry's insurance division said the government is looking at a comprehensive Bill, in line with the Institute of Chartered Accountants of India.

He also said that general insurance council will hold further talks with prospective TPAs before rules are finalised.

"With the entry of TPAs we can move from the present policy of Mediclaim to a cash-less policy. TPAs have agreed that such facility would not only be confined to corporate clients but would be extended to individuals also," Rangachary added.

The cashless system would enable clients to obtain the medical facility without having to pay any money upfront.