While India’s insurance sector has greatly matured from the time it was opened up 20 years ago, the emerging needs of various sections of the populations have made it amply clear that the existing 70-odd players cannot fulfil all of them. Hence, the entry of new players is warranted so that every citizen has insurance cover, Debasish Panda, Chairman, Insurance Regulatory and Development Authority of India (Irdai), said on Tuesday.

Irdai has committed to enable “Insurance for All” by 2047, whereby every citizen would have appropriate life, health and property covers, and every enterprise would be supported by appropriate insurance solutions.

Speaking at the Indian Venture and Alternate Capital Association (IVCA) conclave, Panda said, “We are a diverse nation and cannot have a one-size-fits-all strategy. We need strategies for different geographies, different sections of the society, different lifestyles and income levels, and different needs. All this will require unique insurance solutions.”

“Hence, we need more players and we need differentiated players who can reach out to every citizen in every nook and corner of the country. We need more products to provide choices to consumers. The distribution model also needs to be expanded and it has to be tech-based. So, we need more players, more products, more distribution partners, more technology, and more integration”.

According to the regulator, 19 applications to set up shop are in the pipeline at various stages.

Making a pitch to investors, Panda highlighted that several reforms and initiatives have been undertaken in the sector. An attempt is being made to create an environment that fosters innovation and freedom to operate, promotes necessary ease of doing business, reduces the compliance burden to the bare minimum, and facilitates avenues for growth.

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.

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.”