IRDAI Chairman Asks Industry To Infuse Rs 50,000 Crore Every Two Years To Double Reach

In order to double penetration of insurance industry in the next five to seven years, there is a need to infuse around Rs 50,000 crore capital every two years, according to Debashish Panda, chairman of the Insurance Regulatory and Development Authority of India.

He will meet with the heads of insurance companies after March to discuss this fund infusion, Panda said at a conference today.

According to him, India will be one of the main drivers of the global insurance industry. "We expect to be the sixth largest insurance market by 2032 from the 10th position."

The December numbers indicate industry growth to be around 16-17% as compared to the historic industry CAGR of 10-11%, he said.

The Chairman has reiterated the target of "Insurance for all by 2047", while highlighting that they hope to achieve it before the deadline. "When we turn 100, we should proudly be able to say that we are all insured."

To improve penetration, he suggested approaching and liaising with other ministries like the Housing Ministry, as property insurance penetration in India is as low as 4-5%.

On the regulatory front, he said that reforms have been made to open up the sector and increase ease of doing business. Reforms have been introduced including "Use and File" procedure that would promote innovative products in shorter timelines, reduced compliance, permitting private equity firms to directly invest and increasing tie-up limits for corporate agents from three to nine for life, general, and health insurance companies each.

They have also amended solvency requirement norms, allowing alternate routes for investment by foreign investors and amended registration guidelines for new companies, among other measures.

Panda aims to reimagine distribution and has invited the industry to share new ideas. "We need to continuously engage and come up with better tech-based solutions."

Bima Vistaar, a parametric insurance to provide wide coverage to rural population against natural calamities; Bima Vahak, a women-centric/gram panchayat insurance distribution channel to boost rural penetration and awareness; and Bima Sugam, an online platform for buying and selling insurance, are important components of his strategy to boost penetration.

According to him, the regulator intends to fast-track Bima Sugam, while taking care of personal information safety and cyber-risk and will render it in the right framework.

The move is expected to majorly benefit distributors adding convenience and allowing them to sell policies with just a laptop, he said.

Certain Insurance Act amendments have been proposed by the regulator, based on the demands of the industry. It includes a composite license that would allow life insurers to sell health and general insurance and vice versa.

Panda said that most of the recommendations sent to the government have been accepted and put in public domain for comments.

"We are hopeful that the amendments will be approved in the Budget session of the Parliament."