Chennai, Jan 11 (IANS) The Indian insurance regulator is planning to start the new year with a path-breaking initiative of calling promoters of private life insurers and having a frank discussion with them on the issues facing their companies.
Speaking to IANS on the condition of anonymity, a senior Insurance Regulatory and Development Authority (IRDA) official said: ‘We are planning to meet the promoters of private life insurers and apprise them about the status and issues faced by their companies. We will also set a deadline for the promoters to take corrective action wherever needed.’
Prior to such meetings, the IRDA would do a detailed study about the companies individually, broadly under three areas – accounting, actuarial and market conduct – which would cover the entire gamut of operations of a life insurer.
Attempts to reach IRDA Chairman J. Hari Narayan were not successful.
Officials of life insurance companies told IANS that overseas insurance regulators meet the promoters or CEOs every year and take stock of their operations and set deadlines to correct deviations. Shape-up-or-ship-out warnings were given to the CEOs or shareholders by overseas regulators.
They said the Life Insurance Council, supposed to be a self-regulatory body, is largely a lobby forum and has not performed its primary role effectively which, in turn, resulted in the IRDA overhauling the regulations governing the unit-linked insurance policy (ULIP) last year.
Welcoming the IRDA’s initiative, secretary general of the Life Insurance Council S.B. Mathur told IANS: ‘It is a welcome move. There can be one-to-one discussions between the regulators and the promoters of life insurance companies. It is a good practice that the regulator would set in motion.’
According to industry officials, there were companies with large capital and expense ratios but without commensurate premium income. Regular meetings between the regulator and promoters would be helpful in setting the sector on the right path.
Industry sources told IANS that companies that have declared profits last year have huge accumulated losses which nobody knows when they would be able to wipe out.
