From April 1, 2015, insurance companies will be able to appoint agents directly, according to T S Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDAI).
Speaking to newspersons at a meeting on insurance organised by the Confederation of Indian Industry (CII) here on Thursday, Vijayan said an exposure draft on the issue was already released on the issue and companies were working on that.
In effect, this will mean that the current system of the insurance regulator granting licences to agents after they qualify an exam is set to go.
Referring to regulatory changes on the anvil in view of the recent ordinance hiking the upper cap of foreign direct investment in insurance from 26 to 49 per cent, the Chairman said all regulations will have to be changed in line with the ordinance.
“However, we will not be making sudden shifts in the existing Insurance Act as the industry too needs time to adapt itself to new rules,’’ he added.
The authority will be framing a separate set of regulations for health insurance sector, he said, adding: “The recent ordinance also permits foreign re-insurance companies to open branches directly in India without any separate registration in India. We will be allowing this soon.’’
The higher FDI will also cater to the capital requirements to insurers though some of them were well-capitalised. To achieve an insurance penetration of about 6 per cent in next five years from current 3.5 per cent, about Rs. 55,000 crore capital was required, he added.
Some players had already expressed the desire to increase their stake to 49 per cent. “Now that the rules have been released last week, they might now approach Foreign Investment Promotion Board,’’ Vijayan said.