The purpose of the discussion paper is to highlight the fact that listed companies will always have more stringent disclosure norms
To make listing of insurance firms compulsory, sector regulator Irdai will soon release an exposure draft on the issue.
So far, ICICI Prudential Life Insurance is the only company to announce listing plans.
“We have released a discussion paper on compulsory listing of insurance companies. Comments of the stakeholders will start pouring in on the subject from now on,” Irdai member (life) Nilesh Sathe told reporters on the sidelines of an event here today.
“Based on that, we will be releasing an exposure draft. Then we will come out with guidelines on the issue and give enough time to the insurers so that their business models can be worked out and their foreign partners are made comfortable for the same,” he said.
The purpose of the discussion paper is to highlight the fact that listed companies will always have more stringent disclosure norms. In addition to what has been prescribed under the Companies Act, there will be additional disclosure norms that will be required, Sathe said.
Listing will allow a person having even a single share of Rs 10 in the company to ask questions from management on its decisions and thereby help bring in more transparency into the system, the Irdai member maintained.
Commenting on the recent announcement of Max Life’s merger with HDFC Life, Sathe said “if insurers want to have inorganic growth, merging is the best solution, as organic growth can’t be 100 per cent.”
According to Sathe, the performance of life insurance industry has been quite good this year. It was for the first time in the past five years that the life insurance industry posted a double-digit growth in terms of both premium income and number of policies sold in 2015-16.
There has been a good growth on both fronts in the life insurance industry in July, Sathe said.
Highlighting the recent remarkable growth of group fund-based business in the life insurance sector, he said “The main reason is that the Government has increased the gratuity amount payable from Rs 3 lakh to Rs 10 lakh in the wake of amendment in Gratuity Act.”
All these gratuities are payable by insurance firms. That is why they have funded more for the group business, he said, adding “however, it will not be the case in future.”
On Irdai’s recent bancasssurance norms allowing a bank to sell nine policies — three each from life, non-life and stand-alone health insurance — he said, “There are a good number of banks which have applied for tie-ups with more number of insurance companies.”