India is today one of the fastest growing economies in the world and the insurance sector has a crucial role to play in this growth story. We spoke to the IRDAI’s Mr Debasish Panda about his vision to insure every Indian by 2047 and opportunities in the Indian market.
Insurance Regulatory and Development Authority of India (IRDAI) chairman Debashish Panda told Asia Insurance Review that the financial ecosystem is at the centre of the growth of the economy, with the insurance sector playing a crucial role by providing risk protection, long-term capital and financial security that underpin economic resilience and sustainable growth.
India’s insurance industry, with double-digit CAGR, is expected to grow by 7.1% in real terms over the next five years. With over $833bn in assets under management, the sector fuels infrastructure development, business growth and fosters innovation while creating substantial employment opportunities and promoting skill development.
“Moreover, by providing protection against various risks spanning across life, health, property, MSMEs, Nat CAT, it enhances the resilience of individuals and businesses during economic shocks and crises, by not only providing protection, but also promoting financial inclusion and contributing to long-term savings and capital formation,” said Mr Panda.
Insurance for all by 2047
Mr Panda said that that through the ‘Insurance for all by 2047’ initiative, it envisions a future where every individual in India is covered, and every business is protected.
“Towards this end, a robust regulatory framework has been put in place, which is not only supportive, progressive and principle-based but also enhances ease of doing business and fosters innovation through effective use of data and technology, while keeping the interest of policyholders central,” he said.
Since insurance penetration in India is low, it presents a huge growth opportunity. Mr Panda believes that it is not just about addressing traditional gaps in life, health, property, motor and crop, but the focus should also be on underserved markets like the MSME, ‘missing middle’ in health and new and emerging risks such as climate change and cyber threats.
“This would require more insurers, a wide range of personalised and customisable products, supported by an extensive distribution network that blends physical and digital channels, reducing costs and increasing affordability, and ensuring that we reach the last mile, last house and the last person,” he said.
Bima trinity
- Bima Vistaar: A simple, benefit-based parametric product designed to meet the needs of those at the bottom of the pyramid and to bring more populace into the insurance fold
- Bima Vahak: A women-centric localised insurance distribution force
- Bima Sugam: An e-marketplace that will democratise and universalise insurance access.
Mr Panda said that to make inclusive insurance a reality, collaboration among a wide range of stakeholders, including government at all levels, regulator, insurers, InsurTechs, NGOs, self-help groups, community organisations, microfinance institutions, local businesses, healthcare providers, educational institutions, among others, is crucial. To further this effort, a state-level insurance plan has been introduced, assigning insurers the responsibility to increase insurance inclusion within specific states.
“All of these efforts, put together, are stepping stones towards realising the vision of Insurance for All, ensuring that no one is left unprotected,” he said.
Overhaul in regulatory framework
Mr Panda said that a 360-degree review of the regulatory framework has been conducted, adopting a consultative and participative approach, leading to major reforms over the past two years. Some of these include:
- Shift from a rigid, rule-based framework to a flexible, principle-based approach.
- Streamlined entry with an online NOC portal, FAQs, facilitation groups for applicants and reduced processing time.
- Expanded permissible entity types in insurance, modified investment lock-in periods and eased exit paths for promoter/investor.
- Improving ease of doing business with reduction in number of regulations from 78 to 20 and circulars from more than 370 to 12 and rationalisation of more than 80 returns leading to a significant decline in compliance burden.
- Removed prior approval and increased limits for raising other forms of capital.
- Broadened avenues for investment allocation.
- Allowed use and file procedure for most insurance products, eliminating prior approvals.
- Flexibility in expense management with monitoring and limits of expenses at company level and commissions linked to overall expenses.
- Permissible distribution tie-ups tripled for corporate agent and insurance marketing firm, moving towards open architecture.
- Revamped regulatory sandbox with continuous access and longer testing periods.
- Strengthened corporate governance, with more responsibility placed on the board of the insurers.
- Future readiness with IFRS implementation, risk-based capital standards, and risk based supervision framework
- A range of policyholder-centric measures have also been implemented to enhance trust and confidence in the insurance ecosystem.
Inclusivity
Mr Panda believes that in a country as vast and diverse as India, the traditional ways of insurance are not enough to cater the sprawling needs of the times and this is where technology steps in to break the barriers and bridge gaps for access to financial protection.
“Insurance sector is today moving from paper to pixels and from bricks to clicks,” he said. He highlighted the recent initiatives on the technology front by the regulator, and these include:
Tech adoption and innovation
The revamped regulatory sandbox, allows insurers to test and pilot new and innovative ideas, products and services in a controlled environment. There is a dedicated InsurTech mission mode team at IRDAI to spearhead InsurTech initiatives.
IRDAI hosts a monthly open house for InsurTechs where cutting-edge solutions shaping the future of insurance are presented and discussed. Usage of new age technologies like telematics, AI/ML, blockchains, big data are being promoted.
Data analytics
The Insurance Information Bureau of India, the sector’s data repository, is being revitalised to serve as a dynamic hub for industry-wide data needs, delivering valuable insights for early warnings, fraud detection, underwriting, analytics and more.
Market needs many more players
India is a vast and diverse nation with 1.4bn people, representing 20% of the world’s population, encompassing multiple markets within one market with unique needs and preferences.
“These, along with rapid economic growth, favourable demographic dividend, increasing infrastructure investments, transition to green energy, expanding middle class with rising disposable incomes and increasing financial awareness are driving demand for insurance products at an unprecedented pace, highlighting the enormous potential for the insurance sector,” said Mr Panda.
There are currently 72 insurers operating in the market, with six players entering the market in the past two years. “This is only a fraction of what is needed and that the market needs hundreds of more insurers and much more capital to meet the rising demand,” he said.
Mr Panda feels that specialised insurers can address India’s unique risks, like in the agriculture sector, which employs nearly half of the workforce in India, that presents a massive opportunity. “The increased frequency of extreme weather events is creating demand for tailored crop insurance solutions,” he said.
Another area that he feels has significant potential in the Indian market is in the growing demand for products that address cybersecurity threats, data breaches and business interruptions. “India’s massive infrastructure projects ranging from transportation to energy, present another significant market for dynamic insurance solutions,” he said. Additionally, diverse sectors of the economy such as healthcare, MSMEs, logistics, manufacturing, gig offer untapped potential for specialised products that can cater to emerging risks.
“So, with a rapidly growing market, increasing demand for specialised products and a supportive regulatory framework, India’s insurance sector offers substantial opportunities for new entrants, making it a compelling arena for growth and innovation,” he said. A