GOVERNMENT INITIATORS

The Government has taken many proactive steps to give a boost to this sector:

• The Insurance Regulatory and Development Authority (IRDA) will announce guidelines for mergers and acquisitions (M&A) in the insurance sector by the end of March 2009. The regulator is formulating the guidelines in consultation with the Institute of Actuaries, IRDA Chairman, Mr J Hari Narayan. IRDA has cleared 288 new insurance products this year (2008).
• Earlier in December 2008, IRDA has allowed insurers to acquire up to 20 per cent debt and equity in an infrastructure-related company, compared with 10 per cent earlier. According to IRDA, the move is aimed at enhancing the flow of insurance funds to meet the present needs of infrastructure financing. Relaxing the investment norms further, IRDA has allowed insurers to invest an additional 5 per cent in debt instruments of infrastructure and housing companies, over and above the 20 per cent ceiling, with a prior board approval. The country's largest insurer, LIC, already holds over 10 per cent in a host of companies, which is likely to increase further.
• IRDA has constituted a panel that will monitor the role of TPAs and evaluate their performance in current health insurance market and make suitable recommendations clarifying their utility to the future growth of the health insurance industry.
• Government is planning to ease restrictions on foreign investments in insurance, banking and pensions, and allow foreign direct investment (FDI) investment of 49 per cent from the present 26 per cent.
• IRDA has removed administered pricing mechanism, i.e., de-tariffing in respect of fire and engineering along with motor insurance of general insurance for premium, effective from January 1, 2007.
• The control rates on fire, engineering and workmen's compensation insurance classes have been removed from September 1, 2007.
• Several states aggressively offering public health insurance schemes to their rural poor. A host of private players are rushing with their offerings, sensing huge opportunity in this segment some state governments have also taken a dynamic role in this sector.
• In an arrangement with the regional rural banks (RRBs), the West Bengal government is planning to extend insurance facilities to farmers in the 60–70 years' age bracket through a tie-up with IFFCO-TOKIO General Insurance.
• The Haryana State Co-operative Supply and Marketing Federation Limited (HAFED) facilitated weather-based insurance coverage to contracting farmers through AIC. 50 per cent of the premium for this insurance, which is US$ 5.863 /acre, was paid by HAFED. 25 farmers having 145 acres availed this opportunity in 2008.
• The Government of Andhra Pradesh after piloting the 'Arogya Sri' health insurance scheme in three districts plans to issue health cards to 18 million BPL (below the poverty line) families. As a result, about 60 million of the State's 80 million people will have insurance cover.
• The Karnataka Government has partnered with the private sector to provide coverage at a low cost in the Yeshaswini Insurance scheme to provide for major surgical operations, including those pertaining to pre-existing conditions, to Indian farmers.