IRDA efforts to prevent AL mismatch

By Our Special Correspondent

NEW DELHI, MARCH 28. The Chairman of the Insurance Regulatory and Development Authority (IRDA), Mr. N. Rangachary, today assured investors that the Authority would look into the functions of all insurance companies, including their investment pattern, and ensure that there was no asset-liability mismatch.

Responding to apprehensions of investors in the wake of the stock market collapse and the investigations by the Securities and Exchange Board of India (SEBI) into the alleged bear cartel's operations, Mr. Rangachary told presspersons here today that IRDA would review the functions of insurance companies. Though it was too early for the regulator to review the investment pattern since the new insurance companies had barely begun their operations, he said the companies would have to comply with the prudential norms laid down by the IRDA.

``The problem of mismatch of assets and liability has been taken care of through a system of directed investment and the companies cannot invest the funds outside India,'' he said assuring that Indian insurance companies would be prevented from insolvency problems as faced by some companies during the east Asian crisis.

The IRDA had also asked insurance companies to constitute an `investment committee' comprising the chief executive officer, the chief financial officer, two directors and an appointed actuary (only for life insurance companies), for periodic review of the investment pattern and informing the Authority, Mr. Rangachary pointed out.

At present, insurance companies are allowed to invest only 25 per cent in equities and other permitted securities and a major 50 per cent of their investments is to go into Central and State government securities.

Mr. Rangachary said the appointed actuary in the insurance company had been given powers to look into various provisions to be made by the company and pricing of policies, and ``blow the whistle'' by informing the IRDA if the functions were not found satisfactory.

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Section  : Business
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