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New Delhi, Oct. 3: The Insurance Regulatory and Development Authority (IRDA) today favoured an increase in foreign direct investment in the sector to 49 per cent, saying it required big investments for growth.
“Absolutely (in favour of the hike in FDI limit). I do think unless we go for 49 per cent, we will not have the kind of capital required to underpin the growth of insurance industry,” IRDA chairman J. Hari Narayan said. “This sector requires lots of money. In banks it (FDI) is 74 per cent. In asset management companies, 100 per cent. I do not see why, in insurance companies, it should be 26 per cent. We should increase that.”
FDI in insurance is capped at 26 per cent.
The IRDA today said it would develop 10 standard products in consultation with industry associations that could be launched without regulatory approval.
“For 10 products we will try and work (to develop standard products). We will have to work with the Life Insurance Council and the General Insurance Council to see if we can develop such products,” Hari Narayan said.
The regulator will also come out with guidelines to prevent insurance firms from arbitrarily hiking renewal premiums on health policies under which benefits had been claimed previously. “To some extent, it means they are doing underwriting at the time of the claim. That is not the way you do underwriting and that is what we are bringing in the draft regulations,” he said.
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