IRDA Proposes Greater Investment Freedom to Insurance Providers

The insurance regulatory IRDA issued new guidelines to both life and non-life insurance companies to promote participation of insurers in money market operations. Now, insurance providers can participate in repo (borrowing) and reverse-repo (lending) operations in government securities and corporate debts. They can also invest in Corporate Default Swaps and Securities Lending and Borrowing (SLB) schemes.

IRDA asked all stakeholders to come up with comments on these guidelines within 15 days, so as to help insurers earn money from treasury operations. Insurers are required to put risk management mechanism and should formulate policies for undertaking such risk investments.

According to IRDA draft norms, insurers would be permitted to lend only up to 10% of their total equity holdings in such operations.