The Insurance Regulatory and Development Authority (IRDA) is in the process of reviewing rules and regulations for mergers and acquisitions (M&A) in the insurance sector and fresh guidelines are expected to be announced by the end of the current financial year (end-March 2008-09).
The regulator is currently in consultation with the Institute of Actuaries, IRDA chairman J Hari Narayan said at a seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).
The regulator also expects new and innovative policies in order to provide cover against terror attacks, although this may raise the cost of insurance. The existing terror insurance products are also likely to be upgraded and the premia will change according to the changes in the policy.
The current corpus of terror insurance will also go up in view of more and more entities seeking terror cover.
The Rs1,000 crore common insurance pool, created in the aftermath of strike on the World Trade Centre in 2001, allows for claims of up to Rs750 crore per location.
The premium for terror cover, which currently comes as as an add-on with fire insurance, varies between 8 paise to 22 paise per Rs1,000.
Terror cover can be added on to all sorts of insurance, including accident or life insurance.
As for mergers and acquisitions in the insurance sector, there are no clear norms now. There are 21 life insurance companies and 20 non-life insurance companies operating in the country at present.
''Given what is happening in the financial markets, it is an opportune time for mergers and acquisitions,'' said Hari Narayan.
IRDA is also likely to allow insurance companies to outsource some of their businesses which are not directly linked with the insurance of their customers.
''We are considering allowing insurance firms to outsource non-core businesses, which is prohibited currently and also looking at rationalisation of insurance intermediaries,'' Narayan said.
He expects the country's insurance sector to grow at 17 per cent in the current financial year if the current growth rate of the economy continues. ''If GDP grows 7.6 per cent, premiums would grow at 17 per cent'' Narayan said.