IPO norms for insurance after Sebi-Irda talks

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Hyderabad: The discussions between the Insurance Regulatory Authority of India (Irda) and the Securities Exchange Board of India (Sebi) are likely to be concluded very soon so that the insurance regulator can spell out the guidelines for initial public offers (IPO), said J Harinarayan, chairman of the insurance regulatory body.

Speaking to mediapersons on the sidelines of the graduation ceremony of executive programme in insurance and risk management (EPIRM), he said, Irdahas already had couple of meetings with Sebi to decide on the final guidelines on IPO. It should be completed soon.

Commenting on the Swarup committee’s report which suggested that the agents commission need to be scrapped by 2011, he said, “the committee’s recommendations are not well founded. Right now, only the draft report is out, we will have to now analyse the whole thing”. To stop financial products from being mis-sold, the government had appointed a committee, which proposed phased elimination of upfront commission paid to agents by April 2011. The committee suggested that the upfront commissions should be reduced from 16.25% to not more than 15% of the premium immediately. And in 2010, this should be brought down further to 7% and then on to a zero-commission structure by April 2011.

In the interim period, the report also suggested that the insurance companies should help their agents make the transition to a more matured way of selling and advising.