Tuesday, January 14, 2014

IRDA sets up committee to look into a possibility of FDI in insurance intermediaries, TPAs

With a view to look into a possibility to increase foreign direct investment (FDI) ceiling in insurance intermediaries and third party administrators (TPAs) up to 100 percent, the insurance regulator in India, Insurance Regulatory and Development Authority (IRDA) has formed a ten-member committee, said an IRDA release.

Although, the Insurance Act, 1938 does not specify any FDI ceiling for insurance intermediaries, the regulator itself has limited it to 26 percent.

The committee will be headed by Sr. Joint Director of IRDA Mr. Suresh Mathur. Representatives from insurance companies (life & non-life), broking firms, IRDA officials and industry bodies are members of the committee. The committee has asked to submit its report in three months.

The regulator has received references from various stakeholders requesting them to consider FDI in insurance brokers to 100 percent from existing 26%.

Apart from looking into a possibility of increasing FDI limit for these entities, the committee will also look into the extent to which it is to be permitted, its significance on the industry and study international practices in this regard.

The regulator has recently released the Insurance Brokers Regulations, according to which the broker's licence would have to be renewed every three years. Not more than 50 percent of the premium should be from any one client in a financial year, it said.

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