New Delhi, Sept 26 (UNI) A top official of India's insurance regulator today said there was no need to panic as the Indian insurance sector was insulated from the global financial turmoil on account of strict regulatory mechanism governing the industry.
The government was, however, monitoring every development to ward off any adverse eventuality in the future, Insurance Regulatory and Development Authority (IRDA) member R Kannan told reporters on the sidelines of Insurance Summit here.
On Tata AIG financial health, he said IRDA has not asked for any solvency report from the company, adding there was no need to press panic button.
American Insurance Group has been given a life line of 85 billion dollars by the US government to prevent the world's largest insurer from going bust. The group has tie up with Tata in India.
Replying to a question, Mr Kannan disclosed that IRDA would come out with norms for risk based capital by March 2009. This, insurance experts said, is an effort to comply with Basel 11 norms by the insurance sector in India and is very significant in view of the present global financial turmoil.
On LIC's compliance with the threshold of keeping upto 10 per cent shares in bluem chip companies, Dr Kanan said it was for the company's board to address it.
He said government was contemplating many steps for enhancing penetration of insurance in the country. Insurance penetration in India is just 4.8 per cent as against over 10 per cent in Southeast Asian countries, he added.
Dr Kannan said micro insurance was designed to increase insurance penetration, adding a separate regulatory authority for micro insurance has been mooted to give this sector a boost.
He agreed that cost of intermediation for micro insurance should be brought down since that would help bring down the premium, making it affordable.
He said innovative products also have to be designed to win trust of vulnerable sections of the society in the insurance.
Portability of insurance instruments should be made easy since large sections of the people move from one place to the other, he added.
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