Irdai: the offer of SCI will improve governance and dissemination
Mumbai: The president said the proposed initial public offering (IPO) of Life Insurance Corporation ( SCI ) will lead to better corporate governance and disclosures, which will help the institution, as well as its insured.
The insurance regulator’s comments come in the wake of the government’s announcement that it would list SCI in the current fiscal.
The insurance regulator also expressed concern about subscription losses in the general insurance industry and said that surviving on investment income is not an option, since falling interest rates could eliminate this source of income, such as It has happened in other countries.
The regulator's statement comes after GIC Re declared a net loss of Rs 1,557 million for the quarter ending in December, bringing its solvency margin close to the minimum legal level of 1.5%.
“We want companies to write sustainable businesses. Subscription losses mean that companies have to compensate for losses from other places, ”Khuntia said. He said that while investment was one of those sources, it cannot be depended on, since experiences in other markets have shown that falling interest rates can eliminate investment income.
Speaking at the 21st Global Conference of Actuaries in Mumbai, he said that while the inclusion of non-life companies would improve corporate governance, there would be no obligation to do so. “Previously, companies were expected to quote in 10 years. But because there are many companies that are smaller and will need more time to grow, probably (inclusion in the list) will be done in phases, ”Khuntia said.
In delivering his speech at the conference, Khuntia said he would like to reactivate the Loss Prevention Association of India, which could allow the industry to file claims encouraging insurers to take preventive measures.
In the previous month, Khuntia had warned general insurance companies not to do business at unsustainable prices, saying he did not want the industry to follow the path of the airline or the telecommunications industry. On Tuesday, he said that while the companies subscribed losses, Irdai would not prescribe rates as he did in the age of tariffs.
“We will not intervene in pricing because that is not correct in a deregulated economy. But if the price is not correct when the products are sent to us, we will tell you, ”Khuntia said. Earlier speaking at the same event, MD&CEO said that in the last decade, the non-life industry grew at a compound annual growth rate (CAGR) of 17% to Rs 1.7 lakh crore, while earnings were reduced to Rs 2,713 Rs million from Rs 2,863 Rs. He attributed it to the lack of discipline in pricing.