US disappoint with India's insurance laws

Foreign partners in the Indian insurance companies operate in an "extremely uncertain" environment due to snake and ladder like laws governing the sector, the US Trade office said.

While an Insurance Laws (Amendment) Bill is pending with the Standing Committee of Parliament for increasing the foreign investment in insurance joint ventures to 49(%) per cent, an existing regulation requires that after completing 10 years of operation, overseas investment in such companies would have to be brought back to 26(%) per cent.

Several of the insurance joint ventures, including Reliance Life are about to complete 10 years of operations in India. Whereas HDFC Standard Life has already completed a decade of business here.

So, unless this provision is amended, passage of the Insurance Laws (Amendment) Bill allowing foreign equity to 49(%) per cent would be meaningless.

The US Trade Office in its 2011 National Trade Estimate Report on Foreign Trade Barriers talks about this paradox in the Indian insurance laws.

"While the Insurance Regulatory and Development Authority (IRDA) said it plans to publish a clarification of these regulations, foreign investors continue to operate in an extremely doubtful environment," the US said.

India first opened its insurance sector for foreign participation of up to 26(%) per cent in both life and non-life segment in 1999. A bill pertaining to raising FDI ceiling to 49(%) per cent in the sector is pending before Parliament.

The Bill, when enacted, would allow raising the FDI cap for the industry to 49(%) per cent. However, it has been awaiting approval since 2008, as it was delayed by strong opposition from the Left parties during UPA-I government.

"As with other sectors being considered by the government for greater FDI liberalisation, opposition party lawmakers are concerned that passing the Insurance Bill will result in foreign companies' holdings increasing significantly," the report said.

Keen to enter the Indian insurance market, legendary investor Warren Buffett had also said during his recent visit to New Delhi that a foreign investment cap of 26(%) per cent in insurance sector here was a deterrent.

Buffett's Berkshire Hathaway had recently forayed into the Indian non-life insurance sector as a corporate agent of Bajaj Allianz General.

In India, besides, state-owned LIC, 22 private companies offer life insurance policies. While the general insurance sector has 21 players, which include four PSUs.

ICICI Pru tops private life insurers in premium group

ICICI Prudential Life Insurance topped private sector life insurers in premium collection in the first 8 months of this financial year between April and November,

According to sales data released by Insurance Regulatory and Development Authority (Irda), ICICI Prudential mopped up Rs 4,053 crore followed by SBI Life, which garnered Rs 3,952 crore.

HDFC Standard Life garnered Rs 2,150 crore, Bajaj Allianz Rs 2,033 crore and Reliance Life Rs 1,791 crore. Insurance behemoth LIC collected a total premium of Rs 55,513 crore throughout the period.

Overall, 23 life insurers in the country together mopped up Rs 76,990 crore in first-year premiums during the period, a 39(%) per cent increase from Rs 55,357 crore in the year-ago period.

The private sector, comprising 22 life insurers, collectively registered Rs 21,476 crore worth of new business during the period.

However, Reliance Life Insurance outperformed its private sector peers in terms of the number of policies sold during this period.

Reliance Life sold 13, 12,389 policies between April and November compared with 12, 61,668 in the corresponding period of previous year.

“Our wide-ranging products, catering to every section of the society, and pan-India presence with quality service helped us notch up this business milestone," Reliance Life Insurance executive director and president Malay Ghosh said.

Bajaj Allianz and ICICI Prudential sold 9, 49,183 and 8, 26,904 policies, respectively, to stand second and third.

Life Insurance Corporation of India continued to lead the pack, notching up 1, 93, 54,765 new customers in the first 8 months, but the number was down 1(%) per cent from 1, 95, 77,088 sold a year ago.

The insurance industry as a whole saw a 6(%) per cent dip in policy sales to 2, 63, 51,967 during the period from 2, 78, 91,082 in the same period last year.