IRDAI relaxes private equity investment.

The board of the Insurance Regulatory and Development Authority of India (IRDAI) on Friday approved a host of proposals.

The proposals involve private equity investment, solvency norms, dilution of equity and fundraising.
It aimed to promote ease of doing business and simplify the process of setting up an insurance company.

The proposal allows promoters to dilute up to 26% stake and dispense with IRDAI approval for raising capital through subordinated debt and preference shares.
Investments up to 25 per cent of the paid-up capital by a single investor (50 per cent for all investors collectively) will now be treated as ‘investor’, and investments over and above that will only be treated as promoters.
Reduction insolvency norms
IRDAI also approved the reduction in solvency norms for general and life insurers.
The number of tie-ups

To enable better access to insurance, the number of tie-ups for corporate agents and insurance marketing firms (IMF) increased.
According to the regulator, a corporate agent (CA) can tie up with nine insurers as against three insurers earlier, and insurance marketing firms (IMF) can tie up with six insurers (earlier two insurers) in each line of business of life, general and health for distribution of their insurance products.
Prior approval from IRDAI
To facilitate ease of raising other forms of capital through subordinated debt or preference shares, it has dispensed with the requirement of prior approval from IRDAI.
Governments premium dues
IRDAI has increased the period for considering State and Central Government premium dues for the calculation of solvency position in the case of crop insurance from 180 days to 365 days.

About
It is an autonomous and statutory body. It is responsible for managing and regulating India’s insurance and reinsurance industry.
Foundation

Following the recommendations of the Malhotra Committee, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted.
IRDAI is a statutory body formed under an Act of Parliament, i.e., the Insurance Regulatory and Development Authority Act, 1999.
Composition

The Authority is a ten-member body, specified in section four of the IRDAI Act of 1999, consisting of
A Chairman;
Five whole-time members;
Four part-time members
Aim of IRDAI
To promote the insurance industry’s rapid and orderly expansion, which will benefit the general public, and supply long-term finance for the economy’s rapid expansion.
Objective

To safeguard the policyholder’s interests and ensure fair treatment.
To effectively regulate the insurance sector and guarantee its healthy financial standing.
Establishing regulations regularly to make sure the sector runs well.
Powers and Functions

Issue a registration certificate to the applicant, renew, alter, withdraw, suspend, or terminate such registration.
Safeguarding policyholders’ interests in policy assignment, insurable interest, payment of insurance claims, policy surrender value, and other terms and conditions of insurance contracts.
Charging fees and other amounts to carry out this Act’s objectives.
Entities Regulated by IRDAI

Content Source: Indian Exprss