The Insurance Regulatory and Development Authority of India (IRDAI) has proposed new rules that would allow Indian insurers and reinsurers to raise capital in different forms.
The idea is that new forms of capital such as debt could be issued more quickly, and could allow foreign institutional investors to invest in them.
Documents released by IRDAI show that non-convertible preference shares and non-convertible unsecured debentures would have a minimum maturity/redemption period of 10 years for life and general insurers and reinsurers, and seven years for standalone health insurers.
It also states that the total quantum of the instruments under other forms of capital taken together shall be less than half the total paid up equity and securities premium account and less than half the net worth of the insurer.
Additionally, the solvency of the insurer raising capital must remain at least at the control level of solvency, IRDAI specified.