The Insurance Regulatory and Development Authority of India (IRDAI) has organized a committee to examine the capital needs of different types of insurers to increase the insurance penetration in the country, said a senior official to ET.
Accordingly, the IRDAI is looking at allowing niche insurers like regional, captives, composites, micro and for their subsidiaries.
Currently, as prescribed by the Malhotra Committee on Insurance Reforms, to start a primary insurance company the minimum capital requirement is Rs100 crore and there are some insurance companies who have started operations with a minimum capital over Rs100 crore.
The IRDAI is of the view that niche players can have a lower start-up capital than the Rs100 crore for any insurance company.
According to the report published on ‘The Economic Times’, a former IRDAI official said, “One has to see how the niche players are being defined. And if it is a case of regional insurance company, should they underwrite only the risks located in their region or can go beyond.”
Further how the premium rates are to be initiated, should also be seen, the official added.
“In the case of a life insurance companies, the mortality table is for the entire country. The premium rates are arrived by taking into account the mortality rate of the entire country and there are no region wise differential ratings. In the case of a regional life insurance company how the premium rate is to be fixed is the problem. If a lower capital criteria is fixed, then there should be a regional mortality table and based on that the premium should be fixed,” the retired official added.
Meanwhile, the IRDAI has fixed a period of one month for the committee on capital requirements for niche insurers to submit its report.
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