The new rules enable private equity PE funds to directly invest in insurance companies. Credit: Michal Jarmoluk from Pixabay.

The Insurance Regulatory and Development Authority of India (IRDAI) has given the green light for various reforms in the industry, such as rules for investing in them.

The new rules enable private equity (PE) funds to directly invest in insurance companies and funding through special purpose vehicles (SPVs) is an additional option.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

It also provides provisions for promotors to dilute their stake down to 26% on meeting the condition of having a satisfactory solvency record for the preceding five years. It also should be a listed entity.

As per the new rules, a single investor can pick a 25% stake in an insurance company, making him treated as an “investor”. If the investment is more than 25%, the investor will become a “promoter”.

Based on the insurer’s age, the lock-in period of investment for investors and promoters will be stipulated.

It is also providing a chance to increase tie-ups for corporate agents and insurance-marketing firms. Corporate agents can now patch up with nine insurers each in the general, life, and health insurance sectors.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

For covering the entire state in which they are registered, the area of operation of Insurance-marketing firms has been expanded.

Other reforms include relaxed solvency norms for general and life insurers and removal of the need for approval by the regulator for raising funds through subordinate debt and/or preference shares.

According to the regulator, “the amendments are aimed at promoting ease of doing business and (simplifying) the process of setting up an insurance company in India.”