Insurance regulator reviewing norms for mergers, terror cover

04 December 2008

The Insurance Regulatory and Development Authority (IRDA) is in the process of reviewing rules and regulations for mergers and acquisitions (M&A) in the insurance sector and fresh guidelines are expected to be announced by the end of the current financial year  (end-March 2008-09).

The regulator is currently in consultation with the Institute of Actuaries, IRDA chairman J Hari Narayan said at a seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The regulator also expects new and innovative policies in order to provide cover against terror attacks, although this may raise the cost of insurance. The existing terror insurance products are also likely to be upgraded and the premia will change according to the changes in the policy.

The current corpus of terror insurance will also go up in view of more and more entities seeking terror cover.

The Rs1,000 crore common insurance pool, created in the aftermath of strike on the World Trade Centre in 2001, allows for claims of up to Rs750 crore per location.

The premium for terror cover, which currently comes as as an add-on with fire insurance, varies between 8 paise to 22 paise per Rs1,000.