MUMBAI: The insurance regulator called upon all companies to look at corporate governance standards to be fair, transparent, trustworthy and financially sound.Companies should look at corporate governance and related party transaction, Subhash Khuntia, chairman, Insurance Regulatory and Development Authority (Irdai), said at the annual insurance conference of the Federation of Indian Chambers of Commerce and Industry on Friday.
Insurance industry should provide stability if there is economic turmoil.While expressing confidence that the insurance industry will not run into the kind of problems faced by non-banking financial companies, which are battling massive liquidity issues, the Irdai chairman asked insurers to classify exposure to ILFS as non-performing loans and make provisions.I suggest dont be too bothered about improving market share, said Khuntia.
If growth is high, you dont have to bother about market share.
Put your heads together to make the market grow.He said that in the first year of liberalisation, India had just five life and nine non-life insurance companies.
Both the number rose to 15 in the next four years.
During the first five years, however, only three life and 13 non-life companies reported operating profit.
You must remain financially sustainable, said Khuntia.There are 24 life insurance companies and 34 non-life insurance companies.
Last year, the overall rate of growth of premium was 13%, higher than the economic growth of the country.
Of the life insurance companies, 21 reported operational profit compared to 25 in the nonlife sector.Khuntia called upon non-profitable companies to introspect.
Those struggling will have to change course and see that longterm sustainability is ensured, he said.The insurance regulator is working on establishing risk-based capital system, a self-regulating mechanism where those who manage risk better will be allowed to operate with lower capital.
It is working on risk-based supervision and introduction of IFRS (International Financial Reporting Standard) 17.I am not in favour of unnecessary control but would like to have broad regulations, and within that self-regulation on your part, said Khuntia.IFRS 17 has been postponed to 2022 globally.
India has also postponed its introduction, but Irdai needs the help and cooperation of insurers during the preparatory phase prior to its introduction, said Khuntia.