MUMBAI : The government may allow foreign reinsurance companies to set up branch offices in the country with certain regulatory restrictions, according to a senior finance ministry official. “This is one of the areas, where there is a broader political consensus with respect to foreign investment in the insurance sector,” said joint secretary (banking & insurance) GC Chaturvedi after a seminar here on Wednesday. At present, foreign reinsurers are already allowed to set up representative offices in the country. However, these outfits cannot underwrite business, which branches would be in a position to do. The proposal to allow foreign reinsurers is one of the 113 amendments proposed in the IRDA Act and the group of ministers (GoM) looking into this has already met thrice. The GoM is expected to meet again soon, he said. Mr Chaturvedi also clarified that there is no move to allow public sector insurance companies to tap the capital market to meet the fund requirement for their overseas expansion plans. “The general insurance companies have reserves of over Rs 1, 000 crore, which was adequate to meet their overseas expansions plan,” he said. As for Life Insurance Corporation (LIC), the government has given the corporation Rs 160 crore exclusively for its foreign business. However, there could be some revisions to the norms for standalone health insurance companies. There could be differential capital bases and the overall equity cap could be brought down from Rs 100 crore to Rs 50 crore. Earlier, speaking on the trends in the sector, PC James, member of IRDA, said that as the economy is moving from an industrial economy to service economy, the need for risk cover on various services is increasing, which, in turn, makes a strong case for more liability products. Already in FY07, liability products have recorded the fastest growth, he said.
Source: TIMES NEWS NETWORK, MAY 24, 2007
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