A panel set up by the Indian insurance regulator has advised against mergers between insurance companies and non-insurance entities, CNBC-TV18 reported. 

This advice was given following consideration of potential risks to policyholders that such mergers could entail, the report said, citing sources.  

The committee, headed by Dinesh Khara, former chairman of the State Bank of India, submitted a confidential report to the Insurance Regulatory and Development Authority of India (IRDAI).  

The report was part of the panel’s remit to propose amendments to the Insurance Act, 1938, which also included discussions on increasing the foreign direct investment limit to 100% and the introduction of composite licences, the report added.  

The panel’s recommendation comes against the backdrop of the Indian Government’s consideration of the Insurance Amendment Bill, which had proposed allowing such mergers.  

If the IRDAI adopts the panel’s advice, it could impact ongoing merger plans such as the one between Max Financial Services and Max Life Insurance. 

Furthermore, the IRDAI has formed panels of whole-time members to ensure adherence to regulatory norms by insurers and intermediaries, reported PTI.  

“As part of enforcement function, to decide on the violations observed as regards the provisions of Insurance Act and Regulations issued thereunder, with respect to certain Insurers/Insurance Intermediaries, panels of Whole-Time Members were formed.”  

Recently, reports emerged that the Indian Government is planning to place the health insurance claims portal under the Finance Ministry and IRDAI to tackle hospital overcharging.  

This is to address findings from government and IRDAI analysis that show hospitals are inflating treatment costs, especially for patients with higher insurance coverage.