New guidelines for mergers and acquisitions among non-life insurance companies are expected soon with the Insurance Regulatory Development Authority (Irda) initiating the process after receiving proposals for the same from two non-life insurance companies.
Also, Irda came out with guidelines on outsourcing by all insurers, both in life and general, which will come into practice with immediate effect. Insurers will have to terminate all outsourcing especially core activities such as investment, underwriting and policy servicing to third-party companies. "With regard to merger among non-life insurance companies, even though there's no specific provision in the enactment (Insurance Act), there is one certain specific circumstance where Irda could direct a merger. Other than the genuine provision, there are no specific guidelines required for the M&A process," Irda chairman J Hari Narayan said after launching an SMS-based customer care initiative by SBI (SBIN.NS : 3039.85 +48.9
) Life here. "We have received M&A proposals from two non-life insurance firms and are evaluating the same. As far as M&A guidelines for life insurance companies are concerned, there's already a provision in the Insurance Act. We are examining the two proposals that will set the blueprint for guidelines for M&As among non-life companies," he said. There are about 22 life insurance companies and 21 non-life insurance companies operating in the country. The proposed norms are expected to spur consolidation leading to fewer but stronger players in the insurance sector.
Talking about the regulator's near-term goal, the chairman said Irda is working to enhance policy holder protection.
Further, to streamline the health insurance norms, Irda has formed six working groups under the umbrella of Ficci and CII to look at various aspects of health insurance.
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