The Insurance Regulatory and Development Authority (Irdai) has asked the country’s largest insurer, Life Insurance Corporation (LIC), to reduce its stakes in L&T and ITC to 15 per cent by December 2018.
However, in companies where LIC has strategic investments, like Corporation Bank and LIC Housing Finance, it does not have to reduce its stakes to 15 per cent or less.
LIC could continue its strategic investment in other companies beyond 15 per cent as usual, particularly in Corporation Bank and LIC Housing Finance, said Irdai member Nilesh Sathe on the sidelines of the CII’s 19th Insurance Summit.
The regulator has not asked LIC to sell its stakes in these two companies immediately as it will cause volatility in the market. Moreover, the regulator would extend the time by a year for LIC to reduce its stakes in these two companies if it needed more time to do so, said Sathe.
According to filings with the BSE, the state-owned life insurer held about 16.25 per cent in ITC and 17.97 per cent in L&T in June 2017. The ITC stock closed 0.27 per cent lower at Rs 280 per share and the L&T share closed flat at Rs 1,178 per share on Monday.
Earlier, speaking at the summit, Irdai Chairman T S Vijayan said though the Indian insurance industry was witnessing rapid growth of in various segments, the concern was penetration. “What we have to see is how many people are taking advantage of insurance cover,” he said.
The general insurance business grew 31 per cent last year and life insurance 25 per cent. About Rs 5 lakh crore of premium was collected in a year, taking the assets under management of insurance companies to Rs 32 lakh crore.
Even if technology was adopted extensively, the distribution of insurance products needed a “human touch”, Vijayan said. However, he added, agent requirement depended on a company’s growth strategy.
Digitisation or technology could not solve the problem of fraud, said LIC Chairman V K Sharma. A technology-human matrix capturing individual behavioural data was needed to prevent fraud, he added.
Source: Business-Standard 