Friday, January 20, 2006

Dear IRDA, please let the Industry grow.

A little Pro regulation is necessary though it is not the necessary condition to be an NHB, I am also a little pro-regulation, meaning that, even though I am against regulations in certain sectors, I feel that some regulations are needed in certain sectors. Insurance sector is one. Sometimes I even feel that IRDA is not tough enough where they should be and I would have very much preferred the NIAC model regulations of the USA, where Model regulations are set up or designed by the National Association of Insurance commissioners for the state regulatory body to have their regulations based on the Model Regulations.

Let’s not delve into why I feel they should be strict enough, just for now. This post is regarding something quite opposite. Where, on one side I say that the IRDA is not good enough; they have tried to make up for it on another side. That is what I am writing about. Insurance regulatory bodies are set-up to protect the interests of policy holders. That is it. Where they have failed to make stricter regulations to protect Policy holders, like how they let anyone and everyone wrong-sell Unit linked products, they have been very good in the classic regulations and then some more .

Well, they have been really good in protecting, yes, you have guessed it right. They are busy protecting the national Insurers, and the millions of voting employees. This is the side of regulations that I am against. Yes, I am talking about the FDI cap of 26% that a foreign Insurer is allowed to hold in an Insurance company in India. And as if it was not good enough, they have thrown a spanner into Bharti-AXA’s venture ( today’s Times of India-20th Jan, e-paper page-19) because the IRDA cannot not allow the holding structure even though they have maintained the CAP. Bharti will have 40% in the JV, AXA will have 22.2% and a SPV( Special Purpose vehicle) will have 37.8% where AXA will have 10% in the SPV and Bharti will have 90%. the total stake of AXA translates to only 26%, but IRDA still wants some more

Dear IRDA, please let the Industry grow.

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