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May 2, 2022

Indian regulator increases investment cap for insurers in BFSI space

India’s insurance regulator has increased insurance companies’ investment cap in insurance and financial activities from 25% to 30% of their investment corpus. 

The move is aimed at giving insurers more room for their investment strategy and allowing them to increase exposure to banking, financial services and insurance (BFSI) space.

The announcement came before the Life Insurance Corporation of India’s $2.8bn initial public offering (IPO) opened for subscription to anchor investors.

According to sources, some large private insurers plan to subscribe to LIC’s offering reserved for anchor investors. 

“The authority in the exercise of its powers conferred under Regulation 14(2) of the IRDAI (Investment) Regulations, 2016, permits all Insurers to have exposure to financial and insurance activities up to 30 per cent of investment assets.” IRDAI’s statement read. 

Accordingly, the limit of 25% of investment assets stands revised to a limit of 30%, it added. 

Max Life Insurance senior director & chief investment officer Mihir Vora said: “It gives more flexibility to the insurance companies to invest, allowing them to diversify their exposures further.”

In a separate development, a committee appointed by IRDAI has proposed 14 low-cost micro-insurance (MI) modules to expand protection plans for uncovered citizens and small businesses. 

The MI products are aimed at helping low-income groups recover from common risks such as critical illness, death, and destruction of property and business among others. 

The one-stop solution to provide insurance cover will significantly aid in increasing insurance penetration among these groups of the society, the panel said in its report. 

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