Monday, August 21, 2017

Irdai cautions startups backed by PE firms

India’s insurance regulator has warned insurance startups backed by private equity (PE) firms that they need to show proof that the company will get support for up to 10 years.

The Insurance Regulatory and Development Authority of India (Irdai) made the pronouncement after receiving two proposals for insurance startups with majority funding from PE investors.

Irdai chairman TS Vijayan said startups aspiring to be in the insurance space with PE backing will need a fit and proper promoter who has the ability to invest capital for long-term growth.

Vijayan said the regulator will have to check first if the investor is in a position to support the company for a period of 8-10 years.

Irdai will also check whether there is another entity hiding behind the PE fund.

The two PE-backed firms are Acko, and a proposed health insurance firm promoted by former PNB MetLife CEO Rajesh Relan.

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