Insurance for All Should Become a Reality by 2047 or Even Earlier: Shri Debasish Panda
“The insurance sector offers a huge market which provides a strong potential for growth of the sector. Most Indians have relatively-lower access to insurance compared to international markets, which indicates a huge potential for new entrants. Hence, industry should take a call for making ‘Insurance for All by 2047’ a reality by increasing investments in the sector,” stated Shri Debasish Panda, Chairman, IRDAI, during the CII AGM 2023 held at New Delhi today.
Elaborating further on the CII AGM theme of ‘Future Frontiers: Competitiveness, Technology, Sustainability and Internationalization,’ Shri Panda mentioned that this reflected the spirit of India, which is aiming to rank high on competitiveness, technology use and sustainability through the credo of Vasudeva Kutumbakam and internationalisation.
Addressing the gathering, Shri Panda said that the Indian economy today is at an inflection point. The country is among the fastest-growing economies in the world, with strong demographics, large domestic market size and a robust stock market, among others. Hence, there is optimism about India, which is drawing investors who are keen to establish a footprint in the sector. India has the largest market as it has 1/5th of the world population. Hence in a world starved of opportunity, India is a beacon of hope and this is rightly termed as the ‘India Century’.
Insurance provides a strong foundation of growth and is inseparable from the growth process. It acts as a safety net for the poor, prevents debt distress, helps businesses to scale up, among others. Despite this, the insurance market is largely under penetrated. The challenge is to double the penetration of the Indian insurance market in five to seven years and create greater awareness about insurance products, stated Shri Panda.
Technology adoption is changing the insurance landscape in the country. The use of big data, AI, ML are impacting the sector in more ways than one. The regulator is encouraging insurtech, regtech, and fintech to provide ease of insurance, he said.
The IRDA has undertaken several reforms with the aim of building availability, accessibility and affordability of insurance products for citizens. For this, the authority has adopted the use and file system, wherein it would be possible to launch life insurance products without the approval of the regulator. It has moved away from the micro-management of industry expenses, for example the cost of intermediaries, operating cost of management, etc.; created an overall limit for life, non-life, health insurance based on weighted average of 5-6 years, among others. Such reforms have facilitated the ease of doing business, promoted healthy competition and encouraged the use of technology, he added.
According to Shri Panda, the number of regulations have to be reduced with the repeal of 97 circulars and rationalisation of 79 returns. Further, to meet the distribution challenge, the authority has increased the number of tie-ups that insurance companies can undertake with banks. Besides, the government is encouraging the use of technology platforms to reduce distribution costs and enhance the affordability of insurance products.
He indicated that the government has now moved from the factor-based to a risk-based solvency regime; from rule-based to compliance-based supervision and is transitioning towards becoming the global reinsurance hub.
Having said so, the IRDA recognises the need for further reform for which proposals have been sent to the government. Some reforms include the proposal for changes in the Insurance Act to cater to different segments and geographies; allowing perpetual license for distributors; and permitting insurance companies to offer value-added services.
Shri Panda said that the authority is also working on creating a UPI-like moment for insurance. This is being proposed through the Bima trinity — Bima Sugam, Bima Vistar and the woman-centric Bima Vahak. Further, to reach the last mile, a state-level insurance plan is being proposed, limits on subordinate debt have doubled and exposure to the BSFI sector has increased, which would help in achieving insurance for all by 2047.
Earlier, Mr Sanjiv Bajaj, President, CII, said that there is considerable scope for investment by new enterprises in view of the large, under-penetrated insurance market where most citizens are outside the ambit of insurance.
25 May 2023
New Delhi