Insurance Regulator Update

Insurance Regulatory and Development Authority of India is considering a proposal to increase the combined investment limit for insurers in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to 6 per cent.

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IRDAI may raise REIT and InvIT investment limit for insurers

Currently, insurance companies can invest up to 3 per cent each in REITs and InvITs. The proposed framework would provide insurers greater flexibility to allocate funds between the two asset classes depending on market opportunities.

The discussions have gained momentum following strong investor participation in infrastructure investment offerings such as the Rs. 6,000 crore Raajmarg InvIT issue backed by the National Highways Authority of India. Industry experts said REITs and InvITs are becoming increasingly attractive for insurers because they provide relatively stable cash flows and long-term yield potential suited to insurance liabilities.

High commissions remain a concern: IRDAI Chairman

Ajay Seth said the sharp rise in insurance industry commissions indicates that the sector continues to operate with a structurally high-cost distribution model.

Speaking during the 133rd meeting of the Insurance Regulatory and Development Authority of India, Seth observed that insurers remain heavily dependent on intermediary-driven distribution instead of adopting more cost-efficient digital channels.

He cautioned that high front-loaded acquisition costs reduce value for policyholders, particularly in long-term products, as early exits often leave customers with minimal surrender value and weak asset accumulation.

Seth also flagged persistent underwriting losses among non-life insurers, especially public sector general insurers, rising customer complaints in health and motor insurance, and increasing surrender rates in life insurance as key regulatory concerns requiring attention.

Government may enhance cover under PMJJBY

The government is considering increasing the insurance cover under the Pradhan Mantri Jeevan Jyoti Bima Yojana and other Jan Suraksha schemes as they complete 10 years of operations.