Skip to main content

Management expense caps announced for general insurers

By
The Insurance Regulatory and Development Authority of India ( Irdai) has brought out a new set of norms on expenses of management for general insurance and standalone health insurance companies, based on the line of business. These take effect from this financial year.
In the segments of motor, health retail and miscellaneous retail ( like public liability), the expenses allowed are higher. There would be penalties if the expense limits are exceeded.
Expenses of management would include all those in the nature of operating expenses —commission, brokerage, remuneration to agents and to intermediaries, charged to the revenue account.
No general insurance or health insurance business can exceed the amount stipulated. In motor insurance, the allowable expense is 37.5 per cent of gross premium for the first Rs. 500 crore. It is 32.5 per cent for the next Rs. 250 crore and 30 per cent for the balance.
Any violation of the limits on an overall basis could even lead to restriction on performance incentives for the managing director, chief executive officer, wholetime directors and key management.
Also, possible restrictions on opening of new places of business and removal of managerial personnel and/ or appointment of administrator.
Irdai said it may also direct the insurer to not underwrite new business in one or more segments in case of persistent violation of these regulations. It has also asked insurers to ensure that at the segment level, the deviation between actual incurred claim ratio and that projected at the time of filing of a product be not more than 10 per cent.
If there be a deviation higher than this over a period of three years, an exception report and a plan of action, specifying the reasons, has to be sent to it.
Business Standard New Delhi,19th May 2016

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more

Govt invites applications for RBI deputy governor's post, last date Nov 30

By
  The government has invited applications for the post of deputy governor of Reserve Bank of India from interested candidates with at least 25 years of experience and below 60 years of age as on January 15, 2025.One of the deputy governors, Michael Patra’s current term will end on January 15.According to an advertisement, candidates should have at least 25 years of work experience in Public Administration, including experience at the level of secretary or equivalent in the Government of India, or persons who have at least 25 years of work experience in an Indian or International Public Financial Institutions; or persons of exceptional merit and track record at the national or international level in the relevant field.The last date of submission of the application is November 30, 2024.   It has been clarified that the Financial Sector Regulatory Appointments Search Committee (FSRASC) – a body which will select the candidates- is free to identify and recommend any other person a...
Post a Comment
Read more