In a move that will have far-reaching impact on the corporate governance (particularly on the disclosures) and mergers & acquisitions of the insurance industry in India, Insurance Regulatory and Development Authority (Irda) has set up two different committees to come out with norms or guidelines on corporate governance/disclosure as well mergers and acquisitions.
The regulatory authority is also working on a comprehensive database to enable insurers to design and develop products which are more relevant and cost effective that will help to manage the claims settlement in a better manner, said Irda chairman J Hari Narayan. Narayan said, “We are gearing up for inevitable in the future. We hope to bring out the draft guidelines on these issues and after feedbacks from different quarters, the norms will become effective from next fiscal onwards,” he said.
Explaining in detail, he said, “The level of disclosures by the insurance companies is not up to the mark as compared to that of the listed entities of stock markets in India. The insurance companies are not listed and they don’t make disclosures.This need to be improved. We want to ensure that the insurance companies make disclosures on par with that of the latter which will help in curbing risks, if arise. IRDA has set up an internal committee to work out norms/guidelines for the same and the committee,” he said.
Keeping in mind the possible consolidation in the industry over a period of time and as a preventive measure, the regulatory body has also set up an internal committee to work out the guidelines for mergers and acquisitions, public issue and change in percentage holding in the joint venture companies.
“We need to be fully prepared for consolidation in the industry. At present there is no such norms in place. We are discussing the issue with Sebi to come out with suitable norms,” he said.
To a question, he said Irda has not found any discrepancy in the investments of the insurance companies into stock markets. All are in line with the norms. The solvency margins are quite healthy, he informed. According to the chairman, Irda is also involved in creating a database (pooled in from the insurance companies) of policy holders, records of claim settlements, diseases covered etc to enable the insurers to design, develop proper products. The database to be managed by the regulator will have records of all insurers for the period of last five years which is more comprehensive, he said. Access to the database will be initially extended to the insurers and later will be made available to the public at a certain level.
On the test run, it is found that the cost of procedures is much higher in Mumbai and Bangalore than that in Chennai, Delhi and Hyderabad which led to higher claims settlement than the premiums collected, he pointed out. These measures will enable the companies to manage claim settlements in a much better manner. The database will become accessible in the next few months, he added.
He said the industry is facing enormous task ahead. Wellness and well being is essential component of the industry and they will have to do at the low cost. The hospitals in India are second to none in the world and are capable of doing any critical ailment, he added.
source: The Financial Express
