Nilesh Sathe, member, Life, IRDAI has said that the foreign direct investment(FDI) limit in the insurance sector can be further raised from 49 per cent to 74 per cent over a period of next five to 10 years.
“FDI limit in the Indian insurance industry can be raised but not immediately. It took 15 years to increase from 26 to 49, May be by 2025-30 it may go up further to 74,’’ said Sathe in his exit interview with Asia Insurance Post on Tuesday.
Sathe is laying down his office on Wednesday after four years of IRDA membership.
Terming his tenure at the IRDAI “fulfilling,’’ he commented“It was quite challenging since in 2015 when I joined, Insurance Act 1938 was just amended and large number of regulations were to be drafted. We conducted a special session at NALSAR for 3 days to train the senior officials on drafting of regulations. We got all the 38 regulations notified in a short span of 2 years,’’ he said adding that the new product regulations will be notified shortly.
The new product regulations will provide a great relief to life insurance industry as many pain points have been removed, he said.
He said he was not in favour of making listing of insurance companies mandatory.
“No need of making the listing mandatory for the insurance companies. Now Insurance companies have realised the benefits of listing and important being unlocking shareholders value,’’ he clarified..
He enlisted increasing penetration, avoiding mis-selling,increasing sum assurance through sale of term plans and designing products easy for sale, are the main issues of the life insurance industry.
The life insurance industry should further improve persistency, per capita premium and Sum Assured and claim parameters,he suggested.The performance of industry in 2018-19 was good and for the first time life insurance New Business Premium crosses land mark 2 Lac cr, he said.
Responding to a query whether it was a positive trend that renewal premuim is more than the fresh premium in the life insurance industry, he explained that only companies in formative years have new business (NB) premium more than renewal.
“A company with 10 years of standing should necessarily have renewal more than new premium if it’s persistency is good,’’ he said.
On whether the life insurance industry should go for consolidation, he said that so long as the promoters are in a position to pump in additional capital for increase in business , there is no reason why they will be interested in selling their business. But companies which have limitations in growth may think of mergers and acquisitions
On whether IRDAI had gone beyond rules to accommodate the act of Life Insurance Corporation(LIC) taking over IDBI Bank, he clarified,“Not at all. Moreover they will reduce their stake as advised by RBI.''
On his view on the style of functioning of the current Irda chairman SC Khuntia vs his predecessors, he said,“Everyone has a different style of functioning. But it always benefits the industry so long as it encourages the industry to perform better.’’