IRDA ALLOWS EQITY EXPOSURE OF INSURANCE FUNDS

IRDA today allowed insurance companies to invest in equity Exchange Traded Funds (ETFs) with certain conditions, a move which would help boost inflows into the country's stock market. Only passively managed schemes of the mutual funds which are registered with SEBI and governed by SEBI are eligible, IRDA said in a notification. ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. "These schemes are benchmarked and tracked to publicly available index," it said, adding, these instruments would be listed on at least one exchange which is having connectivity with nationwide terminals. "Investments ETFs may mitigate the concentration risk and ETFs also offer management of funds with operational convenience," it said. Exposure to stocks through ETF would not be reckoned for the overall exposure norms prescribed for individual stocks, it added. The valuation of ETFs shall be in line with the equity shares. ETFs were introduced in India in 2001. Currently, there are about 33 ETFs with assets under management of close to Rs 11,500 crore held by 6.2 lakh investors. Gold ETFs dominate the market in India. 

STANDARD FORMAT FOR POLICY DOCUMENTS

Insurance regulator IRDA today prescribed a standard format for life and non-life insurance policy to improve transparency and help people take informed decisions. "...all the insurers are advised to make available all the policy servicing forms also in languages recognized under the Constitution of India so as to meet the requirements of policyholders," IRDA said in a notification. The insurers may also make available these forms in languages recognised under the Constitution of India on their website so that the forms may be accessed easily, it said. It is envisaged that this initiative benefits in increasing informed decisions by policyholders or beneficiaries, it added. The regulator also said that all insurers also to note that there is a need for maintaining minimum or reasonable font size in respect of all the forms provided or used. "It may be noted that an insignificant print used in the forms may affect the decision taking ability of some of the prospects and policyholders," it said. "Therefore, all insurance companies are advised to use a minimum print equivalent to font 'Times New Roman-size no 7' or above in respect of all the forms that are made available to the prospects and policyholders both during the course of granting the cover and subsequent policy servicing throughout the policy term," it said. The advice of maintaining minimum font size is also made applicable to policy contracts issued to all policyholders, it added.