Link: http://www.indianexpress.com/news/finmin-for-broadening-definition-of-insurance/1084853
____________________________
____________________________
FinMin for broadening definition of insurance
Updated: Fri, 8 Mar 2013, 6:28 IST
Bringing a much needed clarity to the sector, the government has begun a review of the definition of 'insurance' that could help companies in related activities such as insurance broking and intermediaries bring in foreign direct investment through the automatic route.
The finance ministry has asked the department of industrial policy and promotion (DIPP), to review the definition, two officials familiar with the development said.
"The current definition of insurance in the FDI regulations is very narrow and activities like intermediaries and brokers are not included. In contrast, the insurance regulator IRDA considers these as a part of the insurance sector," a senior official said.
Under existing guidelines, foreign direct investment up to 26 per cent is permitted in the insurance sector. But the DIPP — the nodal agency for forming policies on FDI — considers only life and general insurance companies as part of the insurance sector. In contrast, the IRDA includes intermediaries, insurance brokers and re-insurers as a part of the sector.
As a result, only life and general insurance firms can get in FDI up to 26 per cent through the automatic route. Other related firms such as insurance brokers and intermediaries have to seek clearance from the Foreign Investment and Promotion Board.
For example, the FIPB in January this year approved a proposal of Mahindra Insurance Brokers Ltd and Mahindra Financial Services to bring in foreign equity through FDI of Rs 80.41 crore.
Experts point out that a clarity in definition would make the foreign investment regime for the sector simpler and more transparent. "The FIPB should make necessary clarifications to enable firms in related activities such as insurance broking to get FDI through the automatic route up to the sectoral limit. At present, such companies have to take approval from the FIPB," said Sidharrth Shankar, partner, J Sagar Associates.
Significantly, the move comes at a time when the government is also trying to increase the overall FDI cap for the insurance sector to 49 per cent. The finance ministry is likely to table the long pending Insurance Laws (Amendment) Bill in the current session of Parliament.
Experts believe that if the DIPP issues a clarification on the issue, it will also impact the Bill and the government may have to revise the definition of insurance in the proposed legislation as well
=========
IRDA tweaks investment norms:
________________
=========
IRDA tweaks investment norms:
________________
Irda today tweaked norms for insurance companies to invest their funds in different market instruments like government securities and corporate debt to channelise long term savings in infrastructure sector.
NEW DELHI: Irda today tweaked norms for insurance companies to invest their funds in different market instruments like government securities and corporate debt to channelise long term savings in infrastructure sector.
Life insurance companies can now be invested in central government securities which should not be less than 25 per cent of the total corpus, Insurance Regulatory Development Authority (Irda) said in a notification.
However, the total investment in central government securities, state government securities and other approved securities cannot be less than 50 per cent taken together.
At the same time, it has allowed life insurers to invest in housing and infrastructure bonds, with ratings of not less than AA by credit rating agencies. The total investment in the category will not be less than 15 per cent.
On pension funds, the guidelines said money generated from them will be invested in the government bonds, up to 40 per cent of the fund value, while not more than 60 per cent would be invested in other approved instruments.
As for investments in ULIP funds, the guidelines said that at least 30 per cent of the fund value would be invested in government securities and 5 per cent can be invested in housing and infrastructure bonds.
The remaining can be invested in the other approved investment categories.
Life insurance companies can now be invested in central government securities which should not be less than 25 per cent of the total corpus, Insurance Regulatory Development Authority (Irda) said in a notification.
However, the total investment in central government securities, state government securities and other approved securities cannot be less than 50 per cent taken together.
At the same time, it has allowed life insurers to invest in housing and infrastructure bonds, with ratings of not less than AA by credit rating agencies. The total investment in the category will not be less than 15 per cent.
On pension funds, the guidelines said money generated from them will be invested in the government bonds, up to 40 per cent of the fund value, while not more than 60 per cent would be invested in other approved instruments.
As for investments in ULIP funds, the guidelines said that at least 30 per cent of the fund value would be invested in government securities and 5 per cent can be invested in housing and infrastructure bonds.
The remaining can be invested in the other approved investment categories.
No comments:
Post a Comment