IRDAI plans change to insurance company ownership rules for merged banks

With the mergers of 10 state-run banks underway, the IRDAI is planning to allow them to cross the 10% ownership caps in more than one insurance company and limit the banks' management control to only one entity.

The regulator wants such multiple ownerships only in one segment of the insurance industry--either in life or in general insurance. Existing rules do not allow a bank to promote more than one insurance company in the same class of business, reported Business Standard.

Some of the 10 public sector banks, that are merging into four, are promoters of insurance entities. For instance, PNB, Union Bank, Andhra Bank, Canara Bank and OBC own life insurance subsidiaries now. If a bank gives up the board membership of invested insurance companies and abdicate decision-making, then it can hold a stake of more than 10% in more than one insurance company, operating in the same branch of business which is life or general, the regulator clarified.

Listing of insurance companies

The insurance regulator also wants more insurance companies to go public to gain better valuation which has been evident from the valuation of the listed insurers like HDFC Life, ICICI Prudential, ICICI Lombard General, and SBI Life.

"We'd like more insurers to be listed,” said Mr SC Khuntia, IRDAI chairman. The insurance regulator had earlier issued a draft demanding all insurance companies which have completed 10 years of operations to list but some of them are finding difficulties in doing so as they have yet to reach the critical size even after 10 years of their establishment. “Given that, we are not forcing them but are nudging them," Mr Khuntia said.

Source: Asia Insurance Review