India Post seeks actuarial consultant to weigh funds
NEW DELHI: India Post is set to appoint an actuarial consultant to value its various insurance funds, a move which forms precursor to bring its insurance business under control of sectoral regulator, insurance regulatory and development authority (IRDA).
The postal department has called for proposals from qualified actuaries to value its insurance scheme funds such as, post office life insurance fund (POLIF) and rural post office life insurance fund (RPOIF). The POIF had around 40 lakh policies while RPOIF had around 135 lakh policies at the end of March 2010.
The department, which runs its postal life insurance (PLI) and rural postal life insurance (RPLI) schemes as an agency function of the finance ministry, earlier sought to set up a corporate entity to handle insurance schemes to give it autonomy in functioning. IRDA regulations mandate every life and non-life insurer to appoint an actuary with life insurance businesses mandated to have a permanent official for the post.
According to the letter of invitation (LoI) issued by the department, the actuary will analyze various aspects of the funds including their expenses and premium income to certify the solvency of the funds. The consulting actuary will initially be appointed for a period of two years, which can be extended later by one more year.
Actuarial valuation are used to assess risk in the insurance and finance industries. For traditional life insurance, actuarial science focuses on analysis of mortality, production of life tables and application of compound interest to produce life insurance, annuities and endowment policies.
The department of posts have been lagging behind despite having a formidable distribution base of over 1.55 lakh post offices. The department has proposed to create a corporate entity to handle the schemes, a move that will liberate it to introduce innovative products that can compete with private players effectively.
The opinion of law ministry was also sought if IRDA could take control over the department’s insurance business. As per provision of the LIC Act, PLI is a ‘scheme run by central government’ . Hence it is neither a company nor a body corporate , but is part of a department of the central government. On the contrary , Insurance Act defines an ‘insurer’ as any individual or un-incorporated body of individuals or body corporate incorporated under law.
Even as the debate on regulatory control of postal life insurance goes on, the department has requested for greater autonomy to its insurance schemes as it looks to expand its financial services business. “Corporatization of the life insurance business will enable the postal department to compete with private insurance players on a level playing field,” said an official in the department, who asked not to be named.
Source: economic times, 13 Jan 2011
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