While speaking at the Confederation of Indian Industry (CII) Annual Session 2023 on May 25, Debasish Panda, the Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), said that the insurance industry should take a call to make ‘Insurance for All by 2047’ a reality by increasing investments in the sector. He said, “The insurance sector offers a huge market which provides a strong potential for growth of the sector”.
The insurance regulator stated that it’s working on a three-pronged approach — availability, accessibility and affordability to make sure that every Indian should have insurance by 2047.
According to the IRDAI Chairman, most Indians have considerably less access to insurance than people in other countries, suggesting a huge opportunity for new entrants in this industry, “Hence, the industry should take a call for making ‘Insurance for All by 2047’ a reality by increasing investments in the sector”.
Panda spoke on the theme of the CII Annual Session, “Future Frontiers: Competitiveness, Technology, Sustainability and Internationalisation,” stating that it captured the spirit of India, which aims to rank highly in terms of competitiveness, technology use, and sustainability through the philosophy of Vasudeva Kutumbakam and internationalisation.
Panda told the audience that the Indian economy is currently at a turning moment., “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”.
He added, “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’s population. Hence in a world starved of opportunity, India is a beacon of hope, and this is rightly termed as the India Century”.
According to Panda, insurance functions as a safety net for the underprivileged reduces debt distress, and aids in corporate expansion, among other things. It also provides a solid basis for growth and is inextricably linked to growth, “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”.
He added that the country’s insurance market is evolving as a result of technological adoption, “The use of big data, artificial intelligence (AI) and machine learning (ML) are impacting the sector in more ways than one”. Panda also said, “The regulator is encouraging insurance tech (insurtech), regulatory technology (regtech), and finance tech (fintech) to provide ease of insurance”.
To increase the availability, accessibility, and affordability of insurance products for citizens, the IRDAI has implemented a number of reforms. Panda added, “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”.
Debasish Panda stated that IRDAI had stopped micro-managing industry costs, such as the cost of intermediaries, and the operating cost of management, creating an overall limit for life, non-life, and health insurance, based on a weighted average of 5-6 years, among others. He continued by saying that these reforms have simplified doing business, supported healthy competition, and promoted the use of technology.
Panda claims that 97 circulars must be repealed and 79 returns must be rationalised in order to lessen the number of regulations. He said, “Further, to meet the distribution challenge, the authority has increased the number of tie-ups that insurance companies can undertake with banks”. The Chairman added, “Besides, the government is encouraging the use of technology platforms to reduce distribution costs and enhance the affordability of insurance products”.
According to Panda, the government has switched from a factor-based solvency regime to a risk-based one, from rule-based to compliance-based supervision and is transitioning towards becoming the global reinsurance hub.
The IRDAI identifies the need for additional reform, for which proposals have been sent to the government to address it, Panda stated. Among these reforms are the proposal to amend the Insurance Act to better serve various market segments and geographical areas, grant distributors perpetual licences, and allow insurance companies to provide value-added services.
The Chairman said, “We are also working with the councils of both life and general insurance to have a UPI-like moment for the insurance sector. A conceptual framework has been contemplated. He added, “This is being proposed through the Bima trinity — Bima Sugam, Bima Vistar and the woman-centric Bima Vahak”.
Panda stated, “Depending on the potential and the protection gap, we are trying to create a state insurance plan which will further breakdown into district insurance plans and also trying to involve the state government in a similar manner what happens in the banking sector, state-level insurance committee”.
Accordingly, he claimed that once the state governments are treated equally as partners in this effort to reach everyone, it will assist in accomplishing the goal of establishing ‘Insurance for All by 2047’.