Does the prescriptive model of investing of insurance companies need revision?

Yesterday Niranjan Meena madam put an idea contest on “IDRA  banning investment in IDR and this affecting the IDR market of stock analysis” . There Niranjan madam and Sharad, both highly experienced in this field favoured insurance companies going against section 27.

(http://toostep.com/idea/insurance-haveen-banned-from-investing-in-idr-how-it-will-af)

(thanks to Niranjan madam for the idea)

 Based on this I would like to hear from experts around regarding a revision of section 27.

Insurance companies in India are subjected to prescriptive model.Both life and non life insurance companies should invest adhering to section 27 of IRDA act, according to which substantial investment is made in government securities.

For the protection of policyholder’s interest insurance companies should ensure a minimum level of liquidity. To ensure this investments of insurance companies are strictly regulated in some countries, while others have only provisions for setting out admissible investment options. The regulatory model in existence in India is termed “prescriptive model” . Examples of other countries following this model are Japan, Korea etc. But countries like USA, UK, France etc follow the “ Prudent man” model, according to which there is no mandated investment pattern but options should qualify a prescribed minimum solvency level.