The Insurance Regulatory and Development Authority (IRDA) on Friday said that directives and detailed norms for mergers and acquisitions (M&A) in the insurance sector would be finalised in the next few months.
Speaking at a national summit organised by the Associated Chambers of Commerce and Industry of India (Assocham) on Indian insurance industry here, IRDA Chairman J. Hari Narayan said: The insurance regulator and the Securities and Exchange Board of India have commenced dialogues to finalise mergers and acquisition guidelines in the insurance sector. Since the process is just begun between IRDA and SEBI, it would take a couple of months before the IRDA unveils such guidelines to give a new dimension to insurance sector.
Expressing concern over the issue of low penetration of general insurance, especially in rural areas, Mr. Narayan felt that insurance agents needed to be motivated with higher commission to generate larger business. In this regard, he said the IRDA was examining the possibility of effecting an increase in the insurance agents existing commission structure.
The IRDA chief also suggested that insurance agents should be represented on the boards of insurance companies to ensure that every segment of the society is induced to park surplus funds with insurance companies. He, however, did not specify whether the authority was examining the issue from the regulators angle.
Inaugurating the summit earlier, Minister of State for Finance Namo Narain Meena stressed that one of the major challenges before the insurance industry was to generate the required level of awareness for insurance, particularly in people living in semi-urban and rural areas.
One of the criticisms against liberalisation in the insurance sector is that the private insurance companies might not cater to the requirement of rural and social sector on commercial considerations. It is, therefore, in the self interest of the insurance companies to find ways and means to explore the rural sector because growth of the insurance sector will crucially depend on the extent to which the vast potential in the rural sector is tapped by companies, he said.
According to the Minister, micro insurance regulations issued by the IRDA have provided a fillip in propagating the segment as a conceptual issue. With the positive and facilitative approach adopted under the micro insurance norms, he said it was expected that all insurance companies would maintain a progressive business approach and carry forward the spirit of regulations and thereby extend insurance penetration to all segments of the society.