IRDAI chief seeks to reduce compliance burden, to allow new entrants with focus widening reach

The Insurance Regulatory and Development Authority of India (IRDAI) has decided to rationalise the existing regulatory framework and reduce compliance burden on regulated entities to support the growth of the insurance sector, its new chairperson Debasish Panda said in Mumbai.

The former Secretary of the Department of Financial Services in the Finance Ministry, who took over the new responsibility a few weeks ago, held several interactive sessions with insurance industry officials on Wednesday and Thursday to identify steps to ‘harness the full potential of the sector and to ensure every Indian has appropriate life, health and property insurance cover’.

The regulator will soon set up several committees or work groups to help suggest changes so that the Centre may be approached to bring out amendments to the Insurance Act.

“There is need for changes in the regularity framework,” Mr Panda said at a press conference. “Market conditions are changing and the regulations were framed when the industry was beginning to grow. Then there was need for tougher regulations but today, the industry has matured and there is competition,” he added.

“So we will have light regulation and will have more tech-based supervision. Now the regulations are rule-based. It will move towards principle-based,” he emphasised.

He said IRDAI would like to create a framework to enable new entities to enter the insurance market with the focus on having special outreach to areas where insurance penetration has been low.

The regulator would reach out to foreign investors and others, with the assurance that more licences would be given consideration.

He said the regulator would like to create a framework to enable new entities to enter the insurance market in India, with special outreach to global investors for enhancing foreign direct investment into the country.

“The current provision as per the statute is that one has to invest $100 crore to start an insurance business in India. We are of the opinion that we should allow multiple differentiated players, such as captive insurers, standalone micro-insurers, niche players and regional entities to enter the insurance space,” Mr. Panda said.

“The ₹100 crore is a barrier rather than a facilitator. We will request the government to amend the Act and remove this so-called minimum requirement and allow the regulator to decide and amend [the limit] time to time depending on the requirement,” he added.

The regulator has also proposed to dispense with the renewal of registration for insurance intermediaries and to introduce Bima Mitra on the lines of Bank Mitra to enlarge the scope of distribution. The aim here is to bring ‘insurance to every doorstep’.

He said new distribution channels would be introduced and at the same time, the scope of existing distribution channels would be widened to ensure widespread availability of insurance products.

The recently-appointed chairman said IRDAI would facilitate data analytics for identifying gaps in insurance coverage and assess market needs. It will also embrace emerging technologies to improve efficiencies in delivery of services by insurance companies.

There is also a proposal to allow insurance companies to offer allied and value-added services to policyholders and review the effectiveness of the existing insurance ombudsman system.