The insurance regulator may set a timeframe for insurance companies to go for a listing. This is in line with the stand taken by RBI, requiring promoters of new private banks to dilute their stakes within 10 years of granting a licence.

J Hari Narayan, chairman, IRDA, said while the law did not specify a time limit the regulator could do so. He, however, said that the regulator did not want to compel companies as they would look at market conditions before listing. Although some companies have evinced interest in going public, several are holding back until new laws allowing foreigners to hold up to 49%, instead of the existing 26% cap, are in place.

Hari Narayan said that the regulator has finalized IPO norms for life insurance companies which have been exempted from a three-year profit track record to help them go public earlier. Delivering his keynote address, Hari Narayan said in India disclosure requirements were restricted to companies that are listed on the stock exchange. But in insurance the regulator has come out with separate disclosure guidelines ahead of listing because there was a huge body of policyholders who have astake in the company.

Speaking at the event, D K Mehrotra, acting chairman of LIC, said that while the industry has grown individually several companies are running into losses. “We have entered a new decade since liberalization and yet more than half of the private sector life insurance companies are running in the red. Limited distribution, high cost of operation, limited servicing infrastructure, high talent costs and slower acceptance of regulatory changes among investors and intermediaries are some of the challenges that most of us are struggling with,” he said.

Last year, a turf war had broken out between IRDA and market regulator Sebi, which sought to regulate life companies on the ground that the products offered by life insurers were more like collective investment schemes. IRDA had refuted the charges but soon after came out with revised guidelines which required insurers to have a minimum level of commission under life policies and a minimum guaranteed return for pension plans.

IRDA has also asked for clarity on how the accumulated savings under the National Pension System are to be invested once the employee retires. Present guidelines require the employee to purchase an annuity with 60% of the accumulated savings. “Pension, by its definition, would mean payment for life. But there are different types of annuities sold by life companies, which include limited period annuities. There is considerable lack of clarity on this. We do not know whether the framers of the NPS meant pension for life,” said Hari Narayan