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After 5 years, Irdai gives licence to general insurer, 19 more in line

Hyderabad, Nov 26, 2022

For the first time in five years, the insurance regulator on Friday approved registration of Kshema General Insurance as part of measures to improve ease of doing business, increase competitiveness, spur investments and attract newer players. Irdai, in its board meeting, also cleared non-life insurer Go Digit's IPO and approved the Exide Life-HDFC Life merger. In September, Sebi had said that it has kept Go Digit's IPO in abeyance for observations.

There are 19 more registration applications in the pipeline at different stages of approval, including one for Credit Access. "We have completely streamlined the procedure for approvals and expect that within 60 days or two board meetings we will be in a position to approve applications subject to the condition that the other side is ready," said Irdai chairman Debasish Panda.

As part of reforms, corporate agents (which include banks) can now partner nine insurers as against three earlier, while insurance marketing firms can distribute for six insurers, up from the earlier two. Private equity (PE) funds can invest in insurance companies, and promoters can dilute stake to 26% (from 50% earlier). The lock-in period for investors and promoters is now linked to the company's maturity, with only one-year lock-in for a matured insurer. Also, no prior nod is needed for issuing subordinate debt and preference shares.

In a move that will provide Rs 2,000-crore capital relief for insurers, Irdai has reduced calculation forms for various life businesses. Similarly, solvency factors for crop insurance has been released which will release Rs 1,460 crore capital for non-life insurers. Non-life insurers can now reckon government dues up to 365 days for calculation as against 180 days earlier.

Panda said these moves are part of efforts to create an ecosystem that is "competitive, supportive, facilitative, forward-looking and progressive". "For doubling the penetration from the existing 3.2%, you require around Rs 3.5 lakh crore of capital, which is where easing of registration guidelines and other forms of capital will help," said Panda. He said that the industry has grown 20% with a total premium of Rs 5.6 lakh crore in the first two quarters. "We expect the growth momentum to continue in the second half," he said.

To further its goal of insurance for all by 2047, Irdai plans to have a framework similar to the state level bankers' committee (SLBCs). He said just like the Jan Dhan-Aadhaar-Mobile trinity has worked, Irdai is looking at Bima Vistaar, Bima Vahak and Bima Sugam to help the entire ecosystem and policy holders.

[The Times of India]

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