A panel formed to suggest overhaul of the general insurance industry has recommended that insurers relax investment rules, such as permitting investment in Additional Tier-1 (AT-1) bonds of banks, removing the criteria of equity investments only in dividend yielding companies, and increasing investments in infrastructure sector through banks.
The panel’s report has been submitted to the IRDAI, and is being reviewed by the regulator, said an official. The panel included representatives from IRDAI and chiefs of non-life insurance companies.
The committee has suggested allowing insurers to invest in AT-1 perpetual bonds of banks that have declared dividend for the preceding two years, except in cases where the bank is a promoter entity of the insurer. AT-1 bonds offer higher return to the investors, and presently insurance companies are not allowed to invest in such instruments.
The committee comprised Anjan Dey, Chairman And Managing Director (CMD) of Oriental Insurance; Ritesh Kumar, MD of HDFC ERGO General Insurance; Anuj Gulati MD of Care Health Insurance; V. Suryanarayanan MD of Cholamandalam MS General Insurance; A. Ramana Rao, General Manager of IRDAI; and Y. Srinivasa Rao, Deputy General Manager at IRDAI.