The Insurance Regulatory and Development Authority (IRDA) will issue guidelines relating to IPO by the end of February. The guidelines will be for the insurance companies, indicated an IRDA official.

Mr. J Hari Narayan, chairman of the IRDA speaking at the sidelines of an insurance conference said, "We are awaiting Institute of Actuary's guidance note on Economic Capital calculation. Once that is done, we will be in shape. We will come out with the IPO guidelines by February end."

The conference was organized by the FICCI in Mumbai on Tuesday.

Mr. Narayan speaking about the introduction of instruments like derivatives for insurance companies said unless the companies have enough knowledge they should not get involved with such instruments.

Some companies had suggested that plain vanilla derivative product should be allowed but he requires the insurance companies to improve their reporting mechanism before allowing them to get involved in derivatives.

IRDA is also studying the implications of the cap on charges on the unit-linked insurance products (ULIPs). After the study, the authority will decide whether to introduce a similar cap on other traditional products.

“We will see after 6-7 months and then will decide how it can be done or whether it should be done,” he said.

A cap is applicable from January January 1 this year on the difference between gross and net yields for ULIPs of 10-year tenor or less at 300 basis points, and at 225 basis points for ULIPs having a tenor of more than 10 years.

As the charges are already very low, many industry experts believe that the cap is not required. The chairman also said plain-vanilla insurance products are needed in the market which can be rolled out from slot machines.