The Insurance Regulatory Development Authority of India is looking at capital commitment from professionals applying for general insurance licence to ensure that funds continue to flow for future growth, especially those backed by short-sighted private equity players.
“We want commitment for long-term investment from promoters getting in the insurance space,“ said an Irda official on condition of anonymity. “In case of individuals, we want to ensure that the net worth of the promoter is strong and capital is longterm and sticky.“ Irda is looking into applications from three individuals backed by large funds seeking to operate general insurance companies: Go Digit General Insurance by Kamesh Goyal, Acko General Insurance by Varun Dua and Aspire Health Insurance by Rajesh Relan.
“The regulator is going slow in giving out licence as it wants to see who will fund future capital call and ensuring stickiness of capital,“ said one of the applicant.“They are not keen on individuals becoming promoters, therefore asking huge capital commitment from individuals.“
Irda is focused on the ability of promoter to build a successful business depending on how well one understands that business and how much money can one bring in. Insurance companies need funding support more from domestic sources as foreign direct investment limit is capped at 49%.
Irda will take up the issue at its board meeting on Monday. The board will take up applications filed by professionals including Acko General Insurance which is founded by Varun Dua co-founder Coverfox, backed by Narayan Murthy’s Catamaran and other domestic, foreign venture capital.
Any one with more than 10% is given promoter status, as per Irda guidelines.
“As a promoter, one should demonstrate domain knowledge either by partnership or on their own,“ said another individual who is looking to apply backed by private equity.
Source : Economic Times
Date : 28-08-2017