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Life, non-life risk firms form separate councils

Freny Patel

The insurance sector has set up two separate executive councils for life and general insurance companies. The objective being a consensus among the state-owned and private players.

Since the industry has eight players each in life and non-life sectors, the councils will comprise eight members each, who are chief executive officers of the respective companies.

The life insurance executive council will have seven member companies such as HDFC Standard Life, Birla Sun Life, Max New York Life, ICICI Prudential Life, OM Kotak Life, Reliance Life, Tata AIG Life and Life Insurance Corporation of India.

The general insurance executive council will have the four state-owned general insurers and private players such as Tata AIG General, Reliance General, Royal Sundaram Alliance Insurance, and Iffco-Tokoyo Marine.

However, as the Insurance Regulatory & Development Authority (IRDA) approves of more players, representation on the council will be through election.

IRDA members, S Sonig and H Ansari will respectively chair the life insurance and general insurance executive councils.

There will be industry representation on the two councils with Confederation of Indian Industry representing the general insurance sector and Federation of Indian Chambers of Commerce and Industry representing life insurance sector.

The eight members of the life insurance executive council will have its first meeting in Bombay on March 21 and those of the general insurance executive council will meet on March 22.

The setting up of separate executive councils centres around the need to arrive at a consensus among the respective players and give an industry view to the IRDA. A key agenda for the meeting will be setting up of customer protection fund and the catastrophe fund.

As the businesses of both life and non-life companies differ, individual insurance players have yet to reach a consensus as to whether there ought to be a common fund or two separate funds for customer protection with regards to life and non-life. Further, it is yet to be identified on how the contribution to the fund would be handled --whether it would be in the form of a guarantee or actual percentage contribution based on premium or sum assured.

Moreover, LIC is yet to take a view as to whether it would participate in the fund considering that its payments are backed by sovereign guarantee. In contrast, the state-owned general insurance companies do not have sovereign backing and are thus likely to participate in the fund.

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