Norms don’t have to be as strict as they were when private players were first allowed: Panda
Norms don’t have to be as strict as they were when private players were first allowed: Panda
The Insurance Regulatory and Development Authority of India (IRDAI) has decided to streamline the existing regulatory framework and reduce the compliance burden on regulated companies to support the growth of the insurance sector, its new chair Debasish Panda said in Mumbai.
The former secretary of the Department of Financial Services at the Treasury, who assumed the new responsibility a few weeks ago, held several interactive sessions with insurance industry representatives on Wednesday and Thursday to identify steps to “reap the full potential of the sector and to ensure that every Indian has adequate life, health and property insurance coverage.
The regulator will soon set up several committees or working groups to propose changes so that the center can be contacted to bring out changes to the insurance law.
“There is a need for changes in the regularity framework,” Mr Panda told a news conference. “Market conditions are changing and regulations were set as the industry started to grow. Stricter regulations were required back then, but today the industry has matured and there is competition,” he added.
“So we’re going to have light regulation and more technology-based surveillance. Now the regulations are rule-based. It will move towards principles-based development,” he stressed.
He said IRDAI wants to create a framework that allows new companies to enter the insurance market, with a focus on reaching areas where insurance penetration is low.
The regulator would reach out to foreign investors and others with assurances that more licenses would be considered.
He said the regulator wants to create a framework that will allow new companies to enter the insurance market in India and is specifically targeting global investors to encourage foreign direct investment in the country.
“The current provision of the law states that one must invest $100 million to set up an insurance business in India. We believe we should allow multiple differentiated players such as captive insurers, standalone micro-insurers, niche insurers and regional companies to enter the insurance space,” said Mr. Panda.
“The £100million is more of an obstacle than a facilitator. We will ask the government to change the law and remove this so-called minimum requirement and let the regulator decide and change it [the limit] from time to time as needed,” he added.
The regulator has also proposed abandoning the renewal of registration for insurance intermediaries and introducing Bima Mitra, modeled on Bank Mitra, to expand the scope of distribution. The aim is to bring “insurance to every front door”.
He said new sales channels would be introduced while expanding the scope of existing sales channels to ensure wide availability of insurance products.
The recently appointed chairman said IRDAI will facilitate data analysis to identify insurance coverage gaps and assess market needs. It will also include new technologies to improve efficiency in the delivery of services by insurance companies.
There is also a proposal to allow insurance companies to offer related and value-added services to policyholders and to review the effectiveness of the existing insurance ombudsman system.
