By Venkatachari Jagannathan
Chennai, May 19 : Mixed views were expressed by insurance industry experts on the sectoral regulators recent decisions of permitting non-life insurers, foreign reinsurer branches (FRB) and Lloyd’s India not to disclose their underwriting performance or NL 40 statement to the public.
Similarly, the Insurance Regulatory and Development Authority of India (IRDAI) has also said foreign reinsurer branches (FRB) and Lloyd’s India need not publish their half yearly and annual accounts, analytical ratios in newspapers.
According to IRDAI, it has received representations on rationalisation of regulatory compliance needs and has taken action on them.
Transparency is turning into a premium item in the Indian insurance sector is one view while the contrary view is that wisdom has dawned on IRDAI albeit late.
“Any rationalisation is good. But transparency is important,” K.K. Srinivasan, former Member (Non-Life), IRDAI told IANS.
“Discontinuing uploading NL 40 appears to be a retrograde step in this era of transparency,” Srinivasan added.
On the IRDAI actions relating to FRBs and Lloyd’s India he added: “As long as FRB’s (including Lloyds) continue to upload their half yearly and annual revenue accounts, profit and loss accounts, balance sheets and key ratios on their website truthfully this purpose will perhaps be adequately be served. There should be severe penalties if the financials uploaded in the website are found to be false or misleading.”
On the other hand P.S. Prabhakar, Senior Partner of the accounting firm Rajagopal & Badrinarayanan and a former insurance industry official wholeheartedly welcomed the IRDAI’s moves.
“I wholeheartedly welcome such easing of restrictions which should not have been put in the first place,” Prabhakar told IANS.
“It is a good mindset change for IRDAI that has been hitherto only a trigger-happy regulator and has always irritated the insurers or FRBs (though none of them would have the courage to make this charge openly!) to give needless info and to make disclosures that could jeopardise the business interests in this competitive scenario. Wisdom dawns albeit late!” he said.
According to him, financial information of insurers is anyway published.
Prabhakar argues that insurers need not put their underwriting business strategies and sensitive information as to where they are doing reinsurance, the terms.
“Insurance has always involved public money. No one questioned the public sector insurance companies when they were frugal in disseminating even mandatory information in the pre IRDAI days,” Prabhakar said.
The IRDAI has also exempted FRBs and Lloyd’s India having a policy of not investing in Indian equities but invest only in government securities and debt markets from disclosing to the public their investment.
“Insurers do need data on FRBs and the reason why exemptions in disclosures are granted needs examination, especially on NL 40 and investments,” D.D. Singh, retired Member of IRDAI told media.
According to Srinivasan, the least transparent in the sector are the insurance intermediaries who are perhaps not even required to upload their financials on their website.
“That should be insisted upon,” Srinivasan said.
As regards ease of doing business, insurance officials have told IANS that the regulator should look at its process of approving new insurance products.
Curiously instead of looking at those items, the IRDAI has exempted the general and reinsurers from disclosure norms.