Apex body Insurance Regulatory and Development Authority (IRDA) is expected to come out with initial public offer (IPO) norms for insurance companies by October. After a series of consultations with market watchdog SEBI, the insrurance regulator still awaits further rounds with SEBI to chart out the final guidelines on IPO facilitating fair valuation of an insurance firm. In India, there are 22 life insurance firms and 21 non-life insurance companies currently.
Institute of Actuaries is likely to come up with guidance note on valuation in the next 10-15 days. The IPO guidelines will facilitate standardizing the calculation of embedded value of the companies. On the other hand, IRDA is working on disclosure norms for insurance companies that will work in the larger interest of the public.
IRDA wants standardizing the disclosure norms, i.e., draft red herring prospectus as well as the disclosure on the systematic basis by listed companies including balance sheet details, quarterly or semi-annual disclosure.
Insurance companies are worried of rising claims in the health insurance segment as the insurance portfolio has got negative claim ratio of 110%. The claim ratio for the individual health products is nearly 80-90% while it is 120% for the group insurance.