LIC IPO good for corporate governance: IRDAI Chairman

New Delhi: The IRDAI (Insurance Regulatory and Development Authority of India) is yet to get a proposal from LIC (Life Insurance Corporation) on the planned IPO (initial public offering), chairman SC Khuntia said on Tuesday. He also said that the LIC IPO is a good decision as it will improve corporate governance and disclosures.

"Any company which goes public, there will be better corporate governance and better disclosure," he told reporters.

Will LIC be restructured before IPO?

On being asked if LIC's business will need restructuring before the planned IPO, Khuntia said that the government has already started working on the same.
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He noted that it is a very good idea for every insurance company to list and added that the IRDAI will urge entities to go for the same.

While remarking that IRDAI is not making it mandatory for smaller companies to list, Khuntia said that companies must achieve the required scale before going public. "Ideally, a company should achieve sufficient scale to list within ten years of its existence," he added.

'Weed out loss-making products'

Khuntia said that the practice of annual product review needs to be carried out in full seriousness by insurance companies. He also asked insurance companies to "weed out" loss-making products and concentrate on the better-paying ones. "I would like to encourage companies to weed out products which are not selling and simply adding to the number, then they will be able to manage those products well," he said and added that a plea in this regard has been made recently at a meeting with chief executives.

The IRDAI chairman also said that the life insurance sector need not worry with regard to the government's move on certain income tax exemptions as the alternative to invest still exists.