IRDA shelves plans to make listing of life insurers mandatory

The proposal to make listing of life insurance companies mandatory has been set aside for the next two years. The decision has been taken by Insurance Regulatory and Development Authority (IRDAI) to enable insurers to themselves move towards the listing process from now on, sources told Moneycontrol.

This includes having sustainable profitability as well as improving persistency — the rate of policy renewal after the first year — and reducing operating expenses.Currently, only one insurance company, ICICI Prudential Life Insurance, is listed on the stock exchanges. Five public general insurers — New India Assurance, General Insurance Corporation of India, National Insurance, Oriental Insurance and United India Insurance have received a Cabinet nod for an initial public offering (IPO).The insurance regulator had earlier proposed mandatory listing of large insurers. The proposal met with stiff opposition from several players who contended that this was not known to them at the time of entering the business.

“In the banking sector, it is clear from Day 1 that they will have to get listed in the near future. No such requirement was made compulsory for players entering the insurance market,” said the chief executive of a private life insurer.

As per IRDAI rules, a company has to be in the insurance business for 10 years to be eligible to list on the equity market. The regulator considers the financial performance, capital structure after offer and solvency margin, among other factors, to give its approval.