New Insurers Would Need Higher Start-Up Capital

June 11, 2012 MUMBAI: Promoters of new insurance company’s wil have to come up with nearly double the statutory capital requirement. The insurance moderator has indicated to prospective new  entrants that the compulsory Rs 100-crore start-up capital for general and life insurance is too low and companies should  have to start with at least Rs 200-250 crore.

The reason for this is that the capital requirement fixed was nearly a decade ago when the Development Authority and Insurance Regulatory Bill was passed in 1999. Since then, start-up operation expenses of insurance company have increased gradually.

Among the newly prospective entrants, Videocon has amalgamated with Liberty Mutual and has already announced its intention to start with a capital base of nearly Rs 350 crore. Automaker Mahindra & Mahindra has reported to be in talks with US insurer Travelers to set up a general insurance company.


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