IRDA likely to allow automatic clearance of standard life insurance products
22 February 2013
The Insurance Regulatory and Development Authority of India (IRDA) is likely to come out with a new policy giving automatic clearance to standard life insurance products and relax investment guidelines to encourage flow of funds into infrastructure sector.
IRDA, in consultation with the Life Insurance Council, has constituted working groups to set parameters and framework for standard life insurance products to enable automatic clearance of these, minister of state for finance Namo Narian Meena informed the Lok Sabha in a written reply today.
The Insurance IRDA has recently amended its investment regulations for the purpose of canalising funds into infrastructure sector, the minister stated.
Insurance companies, both life and non-life sector have also initiated a number of steps to increase insurance penetration across the country. These include, inter alia, opening of offices in hitherto un-covered towns, and introduction of new products, according to the minister.
The salient features of the IRDA's amended investment guidelines are:
- Permitted investments in 'other than approved investments' to qualify for the 15 per cent mandatory investment requirement of life fund in 'housing and infrastructure' category;
- Investments in `infrastructure debt funds' backed by central government as approved by the IRDA shall be reckoned for investments in Infrastructure;
- Reduced the mandated outstanding tenure of infrastructure bonds from 10 years to 5 years;
- Increased the exposure of any insurer to an infrastructure company to 20 per cent as against the single investee company exposure norms of 10 per cent, which can be further increased by 5 per cent in case of debt with the prior approval of the board; and
- Permitted investments in infrastructure SPVs to the extent of 20 per cent of the project cost subject to appropriate guarantees by the parent company and meeting the specified eligibility criteria.
Investments in infrastructure are excluded from the applicability of industry sector exposure norms.