Norms for insurance IPOs soon

Mumbai: Insurance regulator IRDA will come out with disclosure norms for IPOs to be launched by insurance companies by month-end, its chairman J Hari Narayan said on Friday. "We will be ready with the disclosure norms by the end of this month,'' Narayan said. Insurance companies like Max New York Life and Kotak Insurance are planning to launch IPOs. IRDA thinks proper disclosure norms will make the process transparent and consumers aware of thehealth of the company.      "There are few (insurance) companies which have shown interest for IPOs, and IRDA is working with market regulator Sebi to come out with guidelines,'' Narayan said. The route towards an IPO would have three milestones — finalisation of the red herring prospectus (RHP) requirements, disclosure normsand valuation of insurance companies, he added.      "The first milestone towards IPO will be finalisation of the RHP. The design, structure and disclosure required in consultation with Sebi. The second milestone would be the pattern of disclosure, which IRDA would mandate to insurance companies for IPO,'' he said. "We have worked and standardised it (calculation of valuation). The Indian Institute of Acturial will bring out a guidance note on it. And once the guidance note is ready, we will make it mandatory for the insurance companies,'' Narayan said.      "The disclosure norms are under our jurisdiction and they would be ready by the month, he said. The other milestones may take few more months as there are several other players involved in the process,'' he said.      IRDA also expressed concern over the increasing underwriting losses in the nonlife insurance industry. "Due to increase in competitive pressure post detariffing, underwriting losses in the Indian non-life space is increasing which is not a healthy sign,'' Narayan said. "We do not have actuarial capabilities in non-life industry which is a matter of regulatory concern.'' There is also a shortage of skill-sets with respect to evaluating a product and risk factors before fixing the rate, he said.      Hari Narayan further said that the bancassurance model used to distribute policies by insurance companies in the country is weak at the moment. "We find from observation and examination that the bancassurance model is weak at this point.'' It (bancassurance model) is certainly robust at the time of settlement of credit claims but poor at the time of settlement of claims of personal line products,'' Hari Narayan said. With competition, the fastgrowing insurance industry may witness a consolidation among smaller players, and see the emergence of some big companies, a report said.