The Insurance Regulatory and
Development Authority (Irda) proposes to give an option to general insurance
companies to stay back from listing their shares, but the regulator retained
the right to order any in the industry to take the company public.
"The draft regulations plan to make no provisions for mandatory divestment," Irda said in a draft circular."It empowers the Authority to issue direction to an Indian insurance company to go for an initial public offering (IPO) if the circumstance warrants so. Such a company , within a period of one year from the date of such direction shall comply with these regulations." This is an escape route for general insurers who do not plan to list their companies. Earlier, the Insurance Act 1938 has made it mandatory for insurance companies to divest shares after 10 years into operation, be it life or general insurance companies.
"The draft regulations plan to make no provisions for mandatory divestment," Irda said in a draft circular."It empowers the Authority to issue direction to an Indian insurance company to go for an initial public offering (IPO) if the circumstance warrants so. Such a company , within a period of one year from the date of such direction shall comply with these regulations." This is an escape route for general insurers who do not plan to list their companies. Earlier, the Insurance Act 1938 has made it mandatory for insurance companies to divest shares after 10 years into operation, be it life or general insurance companies.
There are 24 general insurance
companies, of which six are specialised insurance companies dealing with
health, agriculture and credit insurance. No general insurance companies have
expressed any in tention to raise capital through diluting shares to the
public. In the life insurance sector, HDFC Life is expected to be the first to list
its shares on the stock exchanges.
"Irda has started consulting and engaging with the industry on all key issues which is very positive," said a CEO of a general insurance company. Irda has asked companies to respond by October 9. The Amendment to the Insurance Act brought in by the government has given power to the regulator to frame rules including capital raising and listing. State-run insurers such as Oriental Insurance can also go for an IPO as the new Insurance Act permits them over the General Insurance Business (Nationalisation) Act, 1972.
"Irda has started consulting and engaging with the industry on all key issues which is very positive," said a CEO of a general insurance company. Irda has asked companies to respond by October 9. The Amendment to the Insurance Act brought in by the government has given power to the regulator to frame rules including capital raising and listing. State-run insurers such as Oriental Insurance can also go for an IPO as the new Insurance Act permits them over the General Insurance Business (Nationalisation) Act, 1972.
Thanks Nishant for sharing this informative blog it seems very helpful but can you please brief me about general insurance plans.
ReplyDeleteHey thanks Tom for your comments, and can you just tell me what you want to know about general insurance?
ReplyDelete