IRDA may allow automatic clearance of standard life insurance products.

The Insurance Regulatory and Development Authority (IRDA) may 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, Minister of State for Finance, Mr. Namo Narian Meena said in a written reply to Lok Sabha.

The insurance watchdog has constituted Working Groups in consultation with the Life Insurance Council to set-out parameters and framework within which standard life insurance products can be automatically cleared, he added.

In order to canalise funds into infrastructure sector, IRDA has amended its Investment Regulations recently. Some prominent features of these regulations are as follows:(a) Permitted investments in the category of 'other than approved investments' to qualify for the investments mandatory requirement of investing in 15% of life fund in 'Housing and Infrastructure category'.

(b) Investments in “Infrastructure Debt Funds" backed by central government as approved by IRDA shall be reckoned for investments in infrastructure.

(c) Reduced the mandated outstanding tenure of infrastructure bonds from 10 years to 5 years.

(d) The exposure of any insurer to an infrastructure company has been increased to 20% as against the single investee company exposure norms of 10%. The limit can further be increased by another 5% in case of Debt with the prior approval of the Board.

(e) Permitted investments in infrastructure SPVs to the extent of 20% of the project cost subject to appropriate guarantees by the parent company/ companies and meeting the specified eligibility criteria.

(f) Investments in infrastructure are excluded from the applicability of industry sector exposure norms.

Both, life and non-life insurance sectors have started up numerous steps for increasing insurance penetration countrywide. These include opening of new offices in small towns and launching of new products.

( Source: InsuringIndia.com )