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Infrastructure Investment Regulations for Insurance Business

Discover the perspectives of infrastructure investments in insurance business, including regulations, contribution to GDP, and employment opportunities. Learn about approved investments and patterns of investment in infrastructure projects.

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Infrastructure Investment Regulations for Insurance Business

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  1. Infrastructure PerspectivesOf I R D AInvestment Regulations

  2. Insurance Business, particularly life insurance, is a ‘Long term’ business, and generates long term funds which can be used for investment in Infrastructure. • Government funds a substantial portion of its deficit through borrowings from insurers, particularly public sector insurers. • The contribution of Insurance Companies to the GDP increased to 3% in 2005 from around 1.2% in 2000. • IRDA has prescribed mandatory Investment of not less than 15% in the case of ‘Life’ and 10% in the case of ‘General Insurance’ in Infrastructure/social sector. Additional 5% under Housing in the case of General Insurance. • The various Categories of Investment under Infrastructure Sector (slide 4). • Approved Investments under Section 27B of Insurance Act, 1938 (slide5).

  3. Insurance Companies provide employment opportunities in semi urban / rural areas by opening branches. • Insurance provides financial protection to infrastructure projects and infrastructure assets. • Pattern of infrastructure Investments of Insurance Companies (slide 6)

  4. INFRASTRUCTURE INVESTMENTS At present infrastructure investments are made through: • Loans to State Government for Housing • Term Loans / Debenture to HUDCO • Debenture / Term Loans of NHB & institutions accredited by NHB • Bonds of Infrastructure PSUs IRDA has constituted Working Group to look into other avenues for investment in infrastructure. Working Group is examining the following modes: • Mortgaged Backed Securities & Pass Through Certificates • Venture Funds • Real Estate Funds etc.,

  5. APPROVED INVESTMENTS U/S 27B • Approved Securities as per Section 2. • Debentures issued by Municipality under permission from State Government. • Debentures issued by Housing Authority approved by CG / SG constituted under Central Act or State Legislature • 1st Mortgage on Immovable Properties situated in India, approved by Competent Authority. • Debentures with 1st Charge on Immovable Properties / Plant Machinery. • Debentures with Floating Charge on All the Assets of a Company. • Equity / Preference Shares which qualify for certain Conditions. • Current / Fixed deposits in Scheduled Banks.

  6. Life Business % On Controlled Fund A. Life Fund G Sec 25% G Sec + OAS >= 50% Approved Investments IS / SS >= 15% ISEN <= 35% Out of the above 35% OTAI <= 15% B. Pension Fund G Sec >= 20% G Sec + OAS >= 40% Approved Investments <= 60% C. Unit Linked Fund Approved Investments >= 75% OTAI <= 25% General & Re-insurance Business % On Total Assets CG Sec >= 20% CG + SG + Guar. Sec >= 30% Housing + Loans to SG for Fire Fighting Equip >= 5% Approved Investments IS / SS >= 10% ISEN <= 55% Out of the above 55% OTAI <= 25% Pattern Of Investment Abbreviations : ISEN-Investment subject to exposure norms. OAS-Other than approved securities. OTAI-Other than approved investments. IS-Infrastructure Sector. SS-Social Sector

  7. Infrastructure Investment Rs. Cr

  8. THANK YOU

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