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Insurance players target niche segments

Department of Financial Services has released the draft insurance amendment bill that proposes to permit a composite licence for insurers
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Pinak Ghosh   |   Calcutta   |   Published 23.01.23, 01:29 AM

Insurance companies are gearing up for the challenges and opportunities that would emerge in the wake of changing licensing regulations for the industry.

The Department of Financial Services has released the draft insurance amendment bill that proposes to permit a composite licence for insurers. A composite licence may allow insurance companies to specialise in specific fields requiring lesser capital or become distributors of other insurance products.

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“Let us see what are the contours of the eventual regulation. Of course, we have done some homework, but it is not a slam dunk. Also, we don’t have to be a manufacturer in every case. In some cases, we might just be a distributor, in some cases, we may only have a rider,” said Vibha Padalkar, MD and CEO, HDFC Life Insurance, at the company’s third-quarter earnings call.

“Various models will emerge and speaking with the regulator, that is also the intention. You could be a specialised insurer only doing crop or rural or disability and so on which might require lesser capital,” she said.

“These proposals are fundamental reforms in the legal framework governing the insurance industry and these proposed amendments present an opportunity for companies like us to manufacture adjacent products such as health insurance and personal accident. We can also consider manufacture and distribution of other classes of insurance as well as other financial products through our extensive distribution network. These proposed changes can also present both organic as well as inorganic growth opportunities for the industry. We will need to wait for the final approved changes to the law and the associated regulations before concluding on our specific strategic responses,” said N.S.Kannan, MD and CEO, ICICI Prudential Life Insurance, at the third quarter earnings call.

The IRDAI has also made changes to the registration of insurance companies allowing direct investment by private equity funds, investment of upto 25 per cent of paid up capital by one investor.

Adani spin-off bid

Gautam Adani’s group plans to spin off businesses like hydrogen, airports and data centre between 2025 and 2028 after they achieve a certain investment profile, its chief financial officer Jugeshinder Singh said.

Adani Enterprises Ltd, which is looking to raise Rs 20,000 crore in a follow-on share sale, is the business incubator for the group. Over the years, businesses such as ports, power and city gas were first incubated in AEL before being spun off into separately listed firms. AEL houses new businesses such as hydrogen, where the group plans to invest $50 billion over the next 10 years across the value chain, flourishing airport operations, mining and data centre.

“The businesses have to achieve a basic investment profile and maturity before being considered for a demerger. Between 2025 and 2028 we think these businesses can achieve the desired levels for a demerger,” Singh told.



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