Insurance Regulatory and Development (Irda) Act, 1999, and General Insurance Business Nationalisation Act.
In order to ensure that life insurance products are designed by companies to meet best interest of policyholders, Irda is working on draft guidelines on the subject. The
regulator is expected to come out with guidelines soon.
Besides, the regulator issued draft norms for initial public offering (IPO)- Irda (Issuance of Capital by General Insurance Companies) Regulations, 2012.
As per the draft norms, the regulator will take intoaccount the insurer's financial position, its capital structure and regulatory record before the share sale.
In order to ensure solvency of insurance companies, Irda introduced a uniform asset-liability management norms and asked them to take stress test to ascertain their ability to meet financial obligation in the event of a crisis.
The Asset-Liability Management (ALM) norms, Irda said are "critical for the sound management of the finances of the insurers that invests to meet its future cash flow needs and capital requirements".
Ghosh said, meanwhile, that challenging times continued for the industry this year, with insurers trying to adjust to the new regulatory framework.
Though the industry premium levels are still lower than last year; the decline seems to have plateaued, he said.
The life insurance industry recorded a premium income of Rs 2,87,072 crore during 2011-12, as against Rs 2,91,639 crore in the previous financial year, down 1.57 per cent.
At the same time, premium collected by life insurance companies dropped 3.45 per cent in the April-October period due to various factors that are influencing the financial sector as a whole.
The premiums collected by 23 private sector companies and lone state-owned LIC totalled Rs 53,814.09 crore during the period. They together had collected Rs 55,737.84 crore in the April-October 2011 period.
Despite slowdown in the industry during the year, new player entered the field, with Irda giving approval to three general insurance companies -- Magma HDI, Liberty Videocon General Insurance and Religare.
Besides, two other existing life insurance companies witnessed change in the shareholders. In case of Max Life Insurance, New York Life of the US existed while Punjab National Bank picked up 30 per cent stake in the Metlife.
There are 52 insurance companies operating in India; of which 24 are in the life insurance business and 27 are in general insurance business. In addition, GIC is the sole national reinsurer.
Of the total, 8 are in the public sector - two are specialised insurers, namely ECGC and AIC, one