stock markets have taken a severe beating with the advent
of globalisation and liberalisation. They are still groping
in the dark, says Insurance Regulatory and Development
Authority (IRDA) chairman N Rangachary. This is the
reason why IRDA had stipulated certain prudential norms
to IRDA norms, life insurance companies could invest 40
per cent in government securities and the remaining in
other investment instruments, including in equities. However,
Rangachary admits that there are certain profile mismatches
in the investment horizon of insurance companies considering
the tenor of investments.
last week did the Reserve Bank of India auction a 20-year
paper, otherwise it used to be a 10-year paper, and to
that extent assets of these companies are limited, while
the liability spreads over more than 30 years, he says.
This is one problem that the life companies have
the issue of a regulator for pensions, Rangachary stresses
on the need for such a regulator saying that if developments
in the insurance sector are any indication, there is a
need for a regulator.
Rangachary evades queries on who should be the regulator
but indicates that IRDA could handle the work as he cites
that annuity payments are made by life insurance companies.
I do not want to get into that area. He, however,
says he does not agree with the view that the Employees
Provident Fund Organisation should continue as the pension
regulator just because the system has been like that.