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More insurance players required for diverse needs of citizens: Irdai chief

While India’s

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According to statistics, the insurance industry has recorded a CAGR of 10 per cent over the past five years and as of January 2023, the year-on-year (YoY) growth was about 18 per cent. “This itself suggests huge potential in the insurance sector. All it needs is the right kind of approach, support, and an enabling infrastructure and ecosystem,” Panda said.

“The industry is ready to generate good returns. We need to look at it from a fresh pair of eyes, so that the sector’s potential can be looked at and decisions can be taken accordingly,” Panda said.

The chairman has also appealed to the conglomerates and individual investors present in the country to inject money into the sector, as the industry would need a capital infusion of some Rs 50,000 crore every year to double its penetration over the next 5-7 years.

Panda said, Irdai has engaged four mission mode teams that are working on in building a risk-based solvency regime for insurers, among other things. With a risk-based solvency regime, insurance companies will have to hold capital in proportion to the business they underwrite. The riskier the business, the higher the capital requirement. Currently, insurers’ assets are required to be 1.5 times, or 150 per cent, of their liabilities.

“Similarly, for monitoring insurance companies, we are now creating a risk-based supervision framework. This will take a 360-degree view of the risks of the companies – management risks, operational risks, liquidity risks, business risks, capital risks, etc,” Panda added.

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The regulator is also working on moving towards the International Financial Reporting Standards (IFRS) and has developed a team that is working to improve working conditions for insurtechs in the sector.

Speaking about the proposed amendments to the Insurance Act, Panda said, “The proposed amendments to the Insurance Act aim to create a more robust, facilitative, and supportive insurance landscape. With these amendments, we could probably see new players in the form of micro, captive, regional, special, composite insurers catering to the different needs of the geography.”

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