MUMBAI: Startups aspiring to be in the insurance space with private equity (PE) backing will need a `fit and proper promoter' -who has the ability to invest capital for long-term growth, the Insurance Regulatory and Development Authority of India (IRDAI) has said. The statement comes at a time when the insurance regulator has received two proposals with majority funding from PEs. “We have received a co uple of proposals from private equity companies. We have not made up our mind.We would like to see the face of the person investing and whether he is in a position to support the company for a longer term of 8-10 years. Whether the person is fit and proper? Or whether there is someone hiding behind a fund?“ said IRDAI chairman T S Vijayan. He was responding to a query at the 19th CII Insu rance Summit in Mumbai.
Acko is one of the proposed non-life companies that is backed by PEs, including Narayana Murthy's Cataraman. The second company is a proposed health insurance firm promoted by former PNBBSE 3.75 % MetLife CEO Rajesh Relan backed by Arth Capital and Macquarie investment fund.
Vijayan said that there was scope for a lot of small insurance companies today with focus on specific geography or area of operation. “What you need is capital and cost structure to support it. If you want to fl oat a small company , you cannot pay a CEO six-digit salaries,“ said Vijayan.
Speaking at the summit, Vijayan said that the insurance industry had a significant hold over the economy with more than Rs 5 lakh crore of total premium mobilised in FY17 and over Rs 32 lakh crore of assets under management.However, the performance of the industry needs to be measured in terms of number of individuals covered during a national disaster.