Economic Times: March, 2016
New Delhi: Insurance regulator, Insurance Regulatory and Development Authority (IRDAI) has given initial approval to four foreign reinsures to open their branches in the country.
The four firms include Hannover Re, Swiss Re, SCOR and Munich Re.
A senior official confirmed that R1 approval has been given to these firms and the final approval should come by April end.
"The new reinsurance regulations give preference to those reinsures who invest in India," said the above quoted official.
There are three stages of approval include R1, the preliminary approval wherein the regulator evaluates the promoters. In the second stage (R2), IRDAI looks into the business model of the company and in the third (R3) is the final approval.
IRDA chairman TS Vijayan had earlier said that India has the possibility to become a hub of all the re-insurance activities in east and South East Asia.
"Reinsurance hub is possible because even in a city like Singapore large number of Indian people are doing the analytics job, accounts jobs, legal jobs," he had said.
A senior official from one of the reinsurer said that though the process has been much delayed opening of foreign reinsurance branches will strengthen the Indian insurance market.
"It will bring product innovation in the retail and rural insurance segment which would lead to many fold increase in insurance penetration," he added.
As per the latest data, insurance penetration in the country declined to 3.3% in 2013-14 from 5.2% in 2009-10. General insurance penetration in the country stands at 0.7%.
In his budget speech for 2016-17, finance minister Arun Jaitley had proposed to list four general insurers and the listing of general insurance companies is among the major reforms that the government intends to do.
The Insurance Laws (Amendment) Act 2015 enables the government to dilute equity stakes in PSU insurance companies by up to 51% to "raise capital, keeping in view the need for expansion of the business".