Guidelines for merging insurance cos likely next week: Irda

Guidelines for merging insurance cos likely next week: Irda

The Insurance Regulatory and Development Authority (Irda) on Saturday said the guidelines for merging general insurance companies are expected to be out by next week.

"Probably by next week, it will come out...," Irda Chairman J Hari Narayanan told reporters.

He was responding to a question on the acquisition drive by Reliance General Insurance and Royal Sundaram Alliance who have submitted a proposal to the insurance regulator to merge their businesses.

Elaborating, Narayanan said, "In any mergers, there were various entities which were involved (not just Irda) for acquisition..sometimes, the company which wants to merge should get the order from the Court..."

"Sometimes you just need to buy a share (for merging), but some time it can be more complicated... The frame work has to be done in such a way that in no time that the company can have more than one license... whole system has to be worked out," he said.

Besides, Narayan said Irda was working on constituting an "insurance pool" to study about providing insurance cover to nuclear accidents.

"Discussions are on for constituting a pool... the pool will emerge but it will be based on the demand emerges. The system is getting into place... currently, nuclear facilities are only with the government...," he said.

Asked on the government policies for health insurance schemes offered for Below the Poverty Line (BPL) families, he said they would study on how the Kalaignar insurance scheme works.

"The government of India started the RSBY Scheme -Rashtriya Swastya Bima Yojana benefiting the BPL Families... Though the premium are same the limit in the RSBY Scheme is Rs 30,000 whereas in Kalaignar Insurance Scheme it is one lakh and can go up to Rs two lakh".

"Suppose, if the RSBY scheme ends up making loss, we have to see how this (Kalaignar Insurance Scheme) be working properly...," he said.

To a query on whether Irda would permit more insurance companies to provide 'reinsurance facilities', he said there was a Bill to be tabled before the Parliament.

"There is a section in the Bill that proposes that the reinsurance companies can operate through their branches...We will have to wait and see once the Bill is passed...," he said.

The Chairman also evinced confidence that Portability of health insurance would be released in the market very soon.

"We are hoping that will happen very soon...," he said.

Narayan was here to participate in a seminar organised by business magazine Industrial Economist.