Mr. R.K. Nair, member of Insurance Regulatory and Development Authority (IRDA) told press conference that, based on the request received from various insurance companies, IRDA finalized the guidelines for opening an overseas branch. Inspite that no private players have submitted the application for opening an overseas branch. He further added that though some public sector companies are operating in foreign countries, private companies are not showing their willingness to open the braches in foreign countries in near future.
Industry experts believe that the possible reason of private players not willing to open branches abroad is due to the fact that domestic market is still largely unexploited and also difference of opinion may arise with the foreign partners. As per the statistic revealed insurance penetration was 3.96% in the year 2012, thereby showing plenty of scope for growth.
Senior Executive of Bharti AXA Life Insurance saying on the same lines as above, said that “uncertain current economic scenario overseas makes local market more striking.
The salient feature of this new guideline which was made effective from May 2013 onwards is as under:
Company should have a minimum net worth of Rs. 500 crores for life insurance and Rs. 250 crores for general insurance.
Company should have earned a profit for the three consecutive previous years from the date of application.
Industry experts also believe that whether or not private players will open foreign branches, based on this new guideline, is a matter of time.
