IRDAI looks to revise startup capital for insurers, experts ask about pricing method

The Insurance Regulatory and Development Authority of India (IRDAI) has set up a committee to examine the capital needs of different types of insurers to increase the insurance penetration in the country, said a senior official.

The IRDAI is looking at allowing niche insurers like regional, captives, composites, micro and for their subsidiaries.

Currently the minimum capital needed to start a primary insurance company is Rs 100 crore as prescribed by the Malhotra Committee on Insurance Reforms.

There are insurance companies who have started operations with a minimum capital over Rs 100 crore.

The IRDAI is of the view that niche players can have a lower start-up capital than the Rs 100 crore for any insurance company.

Speaking to IANS on the condition of anonymity a former IRDAI official said: “One has to see how the niche players are being defined. If it is a regional insurance company, should they underwrite only the risks located in their region or can go beyond.”

Further how the premium rates are to be arrived at, should also be seen, the official added.

“In the case of a life insurance company, the mortality table is for the entire country. The premium rates are arrived at taking into account the mortality rate of the entire country and there are no region wise differential ratings. In the case of a regional life insurance company how the premium rate is to be fixed is the question. If a lower capital norm is fixed, then there should be a regional mortality table and the premium should be fixed based on that,” the retired official added.

Meanwhile, the IRDAI has fixed one month for the committee on capital requirements for niche insurers to submit its report.

(Venkatachari Jagannathan can be reached at




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