The move will allow insurance firms to innovate and diversify their investments
Mumbai: The insurance regulator IRDA is said to be examining a proposal by insurance firms to allow them to invest in gold and equity ETFs, reports Economic Times.
"We may allow insurance companies to invest in gold and equity ETFs with a cap of 5-10%. There are proposals from various companies to let them invest in ETFs of commodities and equities," an IRDA official was quoted in Economic Times.
The assets under management, liquidity and trading volumes of ETFs will scale up if insurance firms are allowed to invest in equity ETFs. Currently there are 16 ETFs in the Indian market with combined corpus of Rs 1,260 crore.
The current regulations do not permit insurers to invest in commodities. The Insurance Act will have to be amended to accommodate the new rules.
The news report says that the IRDA will cap the exposure to any single commodity.