"Insurance companies need not report to two regulators if they are regulated by one (the Insurance Regulatory and Development Authority)," said C S Rao, chairman, IRDA.
Unless insurance companies want to come under the Pension Fund Regulatory and Development Authority, there will be no need for insurance companies to set up a separate company, said Rao.
However, much depends upon the pension regulations yet to be put out. Should they be more attractive in terms of capital requirement, investment and other related issues than is the present case under IRDA norms, some companies could look at setting up a separate company.
There has been much debate among insurance players, which have already put in Rs 100 crore (Rs 1 billion) capital for setting up an insurance entity. Many do not see the need for having to bring in additional capital to set up a separate company for dealing with pension products.
This is especially since the IRDA Act allows companies to undertake the insurance and pension businesses.
Not willing to comment on whether there would be separate caps for foreign direct investment for pension companies, Rao said, "IRDA will have dialogue with PFRDA. It is likely that the requirement of capital will be much less though it depends upon the regulations."
Rao was speaking to Business Standard on the sidelines of a two-day seminar on 'New Frontiers in Indian Insurance', organised by the University of New South Wales, the Australian government and Jamnalal Bajaj Institute of Management Studies.
In his keynote address, Rao expressed concern over detariffing the insurance sector as it could threaten solvency margin of companies.
"For want of adequate data, and proper underwriting skills, sudden detariffing could have an impact on the industry due to competition," said Rao, adding that there could be problem of pricing undercutting.
Rao further pointed to the criticism against the regulator in terms of too much regulations.
"As there is a weakness in the insurance sector, in the interim period we will continue with regulations till mutual trust is established between the regulator and the industry," said Rao.
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