IRDAI Proposes Gold ETF Investment, Higher Limits For REITs And InvITs

The Insurance Regulatory and Development Authority of India (IRDAI) has proposed changes under the Master circular on Actuarial, Finance and Investment Functions of insurers.

The current norms do not allow insurers to invest in commodities. The proposed changes will allow insurers to invest the Unit Linked Insurance Plan (Ulip) money in Gold Exchange Traded Funds (ETFs) upto 5 per cent of a segregated Ulip fund assets within the overall mutual fund cap of 15 per cent.

On the same lines, the proposed norms double the investment cap in REITs/InvITs and REIT bonds upto 6 per cent of the respective fund size of the life insurer and 6 per cent of the investment assets of general insurers at any point of time.

Aneesh Srivastava, executive director and chief investment officer at Star Health and Allied Insurance said, "These are attractive and safe assets giving around 6-7 per cent earning yield, over and above a
capital appreciation. If these limits are finalised, they will help in better product pricing for insurers."

The regulator in its draft circular has also proposed to bring down the minimum public holding at the time of investment in InvIT/REIT to 25 per cent from the current 30 per cent of the total outstanding
units of the InvIT/REIT.

The proposed norms would be applicable for life, general and health insurers. If the norms go through, they would allow insurers to make higher returns on their investments, make product pricing competitive and make long term funds available for infrastructure investments.