Insurance and Pensions Executive Committee

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					                                                                                          1615 H Street, NW
                                                                                      Washington, DC 20062
                                                                        Tel: 202-463-5492 Fax: 202-463-3173

                   Insurance and Pensions Executive Committee
                          Advocacy Objectives for 2011

   Pass the Comprehensive Insurance Act: Passage of the Comprehensive
    Insurance Bill will continue to be the key objective of the Insurance and Pensions
    Executive Committee in 2011. To that end, USIBC will:

    -   Engage the Ministry of Finance to ensure any negative recommendations in
        the Standing Committee on Finance Report (e.g. amending the FDI provision
        in the Bill) is not adopted by the UPA Government.

    -   Once the Bill is voted out of the Standing Committee, USIBC will reconstitute
        the ad hoc coalition of international insurance associations to develop a
        broad, international advocacy campaign with Parliament, the Finance
        Ministry and other key stakeholders.

    -   Utilize the new Treasury-led Strategic Dialogue for high-level advocacy by
        Secretary Geitner and other senior Treasury Officials. Continue to engage
        with the USG to ensure broad advocacy support from the Embassy, U.S. Trade
        Representative’s Office, and the Departments of Commerce and State.

    -   Organize an Executive Policy Mission to India to engage in directly advocacy
        with the GOI.

   Tax-Related Issues Governed by Central Government

    -   Extend service tax exemption to insurance agents. Advocate for the
        extension of the service tax exemption to additional agents, which will
        benefit all the agents, as they will share the burden of the service tax levy
        more fairly.

    -   Extend tax loss carry forward period. Push for India to allow a 10+ year
        tax loss carry forward period, in line with other major Asian markets.

    -   Level the tax rates for unit-linked insurance products and similar
        products. In 2008 India began to levy service tax on the entire range of
        charges in a unit-linked life insurance policy such as the fund management
        charge, policy administration charge, the policy allocation charge, etc. The
        policy allocation charge specifically is levied by insurers to recover initial
        acquisition cost of the policy and is not a charge for the management of
        investment under the unit-linked plans. For mutual funds, the entry and exit
        load charges (akin to the policy allocation charge in ULIP) are meant to meet
        initial issue expenses and other specified expenses incurred by the mutual
                                                                                         1615 H Street, NW
                                                                                     Washington, DC 20062
                                                                       Tel: 202-463-5492 Fax: 202-463-3173

        fund, and are not subject to service tax; only the “investment and advisory
        fee” charged by the asset management company to the mutual fund is
        covered by service tax.

   Engage the IRDA: In 2011, USIBC will increase direct engagement with the IRDA
    to help influence and shape regulatory rule-making to ensure the continued
    health and vibrancy of the insurance sector. Specifically, USIBC will press the
    IRDA on a number of key issues:

    -   Price Controls and Variable Insurance: Engage the IRDA to ensure the IRDA
        does not institute new and restrictive policies related to price controls and
        variable insurance.
    -   Bancassurance limitation: USIBC will advocate for changes to this policy to
        allow banks to distribute products from multiple insurance partners.

    -   90:10 Rule: USIBC will advocate for changes that allow a larger share of
        valuation reserves of par funds to be distributed to shareholders.

    -   Retain agent commissions: USIBC will advocate for policies that allow
        companies to pay upfront commissions to ensure retention of talent.

    -   M&A and IPO Guidelines: USIBC will follow developments in IRDA M&A and
        IPO Guidelines and prepare and advocacy agenda in case there are areas of

   Pass the Pensions Bill: Continue to advocate for passage of the Pensions bill
    through direct lobbying with key stakeholders in India.

Other Key Priorities for 2010
 Lobby the Reserve Bank of India (RBI) to increase the current FDI cap on
   mortgage guarantees.

   Lobby the RBI to address existing policies that inhibit foreign direct investment
    (e.g. repeal of RBI Circular 20).

   Continue advocacy and support for ongoing Bilateral Investment Treaty
    negotiations through the USIBC Trade Policy Initiative.

   Following price liberalization, the IRDA has not liberalized policy wordings,
    which has led to a commoditized product sector where the only differentiation is
    on price and to a much lesser degree ‘’service”. This is causing considerable
                                                                                          1615 H Street, NW
                                                                                      Washington, DC 20062
                                                                        Tel: 202-463-5492 Fax: 202-463-3173

    operating difficulty particularly for foreign entrants (even under the 26% JV cap
    limitation) to demonstrate the value of broader all risk wordings, bring more
    world class best practice options to industrial property offerings and frustrating
    many Fortune 1000 MNCs with onshore operating subsidiaries. In sum, it
    effectively forecloses a major potential area of competition that would be highly
    beneficial to all commercial policyholders whether based in or outside of India
    and unfairly favors domestic insurers over foreign insurers.

   There has been a move to restrict, or even stop completely, access to offshore
    reinsurance capital markets. This could be to protect the onshore influence of
    the state reinsurer and again does not create a level playing field. In fact, while
    China went in a similar direction for a while, they liberalized access to foreign
    reinsurance markets after recognizing the benefits of opening up competition.

Secretariat:          Michael DiPaula-Coyle, USIBC
Committee Chair:      Richard Rossow, New York Life

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