The Indian insurance sector needs an annual capital infusion of around Rs 50,000 crore to double insurance penetration in the country in five years, Debashish Panda, Chairman of the Insurance Regulatory and Development Authority of India (IRDAI) said on Friday.
He urged conglomerates to infuse funds into the sector as it is capable of generating attractive returns on equity.
“We need more conglomerates to enter the insurance sector,” he said in his address at an industry event organised by the Confederation of Indian Industries (CII) in Mumbai.
In 2021-22, India’s insurance penetration - premiums as a percentage of gross domestic product (GDP) - was 4.2 percent.
He elaborated on the regulations framed to enable ease of doing business for insurance companies. Since June, the regulator has announced several regulatory changes such as use-and-file to launch products without prior approval, easing of capital raising and solvency norms, and easy entry-exit for private equity firms to invest in insurance companies.
Regulator-backed online insurance marketplace to take shape
It has also allowed corporate agents to tie up with nine insurers (up from three earlier) and initiated Bima Sugam, Vahak, and Vistar proposals.
“These will be win-win for all - insurers, policyholders, and distributors. Distributors will be able to sell policies seamlessly on the platform, without the need to gather forms or deposit cheques. Everything will get settled on this platform,” he said. Bima Sugam is proposed to be an industry and regulator-backed online marketplace for selling all kinds of insurance products.
However, he did not provide a definite timeline for the launch of Bima Sugam, which will essentially function like an industry-enabled platform for buying and selling insurance policies as also claim settlement and other service requests.
“A committee has already deliberated upon and fast-tracked the proposal…(should) come up at the earliest possible time-frame,” Panda said.
More regulatory developments are on the cards
He alluded to proposed regulations such as cap on expenses of management and payment of commissions to distributors that are in the pipeline.
"Amendments to the Insurance Act (for instance, composite life and general insurance licence for companies) have been accepted by the government. Let’s hope that they go through in the next parliament session,” he said.
“It is critical. Companies should create a separate vertical with an independent set of redressal officers to handle complaints. It does not make sense if the complaints (that reach IRDAI’s grievance management cell) reverse in the same direction (and go back to the company official who might have left the grievance unresolved),” he added. He stressed the need for simplified insurance processes and documents.
