Cheap insurance online

Bangalore: Life insurers, including the public sector Life Insurance Corporation of India, have got filed their quarterly solvency tax returns with the Insurance Regulatory and Development Authority (IRDA).

Top functionaries of the IRDA said: "Technically LIC have complied with the IRDA guidelines. They have got sent us a statement. But there are procedural issues."

LIC is governed by the LIC Act 1956 while all the private sector insurance companies come up under the IRDA Act of 1999 and the Insurance Act of 1938.

Consequently LIC's processes were in conformity with the legislative act government it, and not necessarily that of the IRDA. Besides, LIC had just completed coverage its yearly consequences for 2006-07.

But beginnings said that the Group of Ministers (GoM) have already made recommendations for amendments to the LIC Act, which would do the coverage giant accountable to the regulator.

However, these amendments are yet to be passed by Parliament, in position of resistance from the Left parties. These recommendations also included alterations to the autonomous warrant screen on policies issued by LIC.

The IRDA functionaries said that all insurance companies had complied with the deadline of August 15, as mentioned in the February directive of the regulator. The needed solvency border is the 1.5 modern times the insured liabilities or a lower limit solvency border of Rs 50 crore, whichever was higher. But this was the first clip that insurance companies were filing audited quarterly solvency reports. So far solvency coverage was done on an yearly basis.

No resistance

There was virtually no opposition to filing one-fourth solvency returns. In fact, the full private sector have supported the tight solvency guidelines. ICICI Prudential Life Insurance Company Ltd's Executive Director, Normality Second Kannan, said: "This is the international pattern and we are complying with globally accepted coverage standards."

Quarterly solvency studies supply an early warning signaling for regulating intervention. The quarterly solvency bespeaks whether life insurers' capitalization is in line with concern volume.

In the first one-fourth for which solvency studies were filed, gross premia of life coverage companies in the country, including the LIC amounted to Rs 12,512 crore. Private sector accounted for 32 per cent of the marketplace share.

But the beginnings said that at least 80 per cent of the policy accumulations with the private sector coverage companies during Q1 were by manner of unit of measurement linked insurance policies (ULIP), with a prejudice to growing or equity schemes.

With the equity marketplaces on a high during the period, solvency was hardly an issue.

Limited risks

However, even in the event of an equity downturn, life insurance companies are improbable to be affected much since in ULIPs, the investing hazards are entirely the policyholder's. There are no bonded tax returns and therefore no solvency issues. Moreover, the beginnings said, life insurance companies pushing for ULIPs was also largely driven by the authorities holds in credence of the GOM recommendations fearing political reprisals from the Left. The GOM recommendations were to raise the foreign equity cap to 49 per cent from the current 26 percent.