Sector regulator IRDA
will soon develop a mechanism for faster approval of insurance policies and encourage companies to come out with low premium products for increasing insurance penetration, a senior government official said on Wednesday.
"Roadmap have been agreed upon for faster approval of products (by IRDA)," Financial Services Secretary D K Mittal said.
The meeting between Finance Minister P Chidambaram with IRDA Chairman J Hari Narayan also dealt with issues relating to increasing insurance penetration and augmenting investment flow into the infrastructure sector.
Some decisions are expected by Wednesday or Thursday, Mittal added.
"The meeting discussed how to increase insurance penetration, how insurance companies can do more business, how better products can be introduced at lower premium, and how more investments can flow into infrastructure sector," Mittal said.
The insurance companies have been demanding from the Insurance Regulatory and Development Authority (IRDA) faster clearances of products filed with it.
At a meeting with Chidambaram, relaxation in investment norms
to help the sector earn more premium was also discussed.
The Finance Ministry is now looking at the possibility of relaxing norms for insurance companies to attract more funds for the infrastructure sector as part of efforts to prop-up the sagging economy.
As per estimates, the investment corpus with the life insurance companies is around Rs 13 lakh crore. Of this, only 20 per cent currently goes towards the infrastructure sector.
As per the current Insurance Regulatory Development Authority (IRDA) norms, insurance companies can invest only in highest rated 'AAA' or 'AA' credit-rated debt paper.
Life insurance companies are allowed to invest up to 50 per cent in government securities, 15 per cent in infrastructure bonds and 35 per cent in other investment grade corporate bonds and equities.
The regulator is at present mulling options to allow sector companies to invest more in non-AAA rated securities, including 'A+' and 'A' papers of corporates.
Last year, the Department of Industrial Policy had favoured allowing life insurance companies to invest in greater quantity in non-AAA rated debt instruments to encourage flow of funds to the infrastructure projects.
India needs about a trillion dollar investment in the infra space during the 12th Five-Year Plan (2012-17).