Debasish Panda,chairman, IRDAI
“After two-decades of liberalisation, the Indian industry is matured and have to be given more freedom in fixing market determined pricing and launching innovative products,’’ said Panda, who retired as secretary of the department of financial services in the finance ministry
Mumbai:
Launching sweeping liberalisation initiatives,`Insurance Reforms 2.0′, Hyderabad based Insurance Regulatory and Development Authority of India (IRDAI), under its new chairman Debasish Panda, has decided to rationalise the existing regulatory framework including capital requirement, reduce compliance burden on various industry players and going all out on adoption of technology, to support the growth of the insurance sector.
There will be light regulation with more tech-based supervision. Now, the regulations are rule-based and it will move towards principle-based,” said Panda, while addressing a press conference in Mumbai on Thursday at the conclusion of 2-day interactive session with all the insurers and reinsurers to identify steps to ‘harness the full potential of the sector and to ensure every Indian has appropriate life, health and property insurance cover’.
The regulator will soon set up several working groups to help suggest changes so that the Centre may be approached in next three-four to bring out amendments to the Insurance Act.
“After two-decades of liberalisation, the Indian industry is matured and have to be given more freedom in fixing market determined pricing and launching innovative products,’’ said Panda,who retired as secretary of the department of financial services in the finance ministry in Januray end.
“There is need for changes in the regularity framework. Market conditions are changing and the regulations were framed when the industry was beginning to grow in 2000. Then, there was need for tougher regulations but today, the industry has matured and there is competition,” he added.
He said the IRDAI would like to create a framework to enable new entities, that can to enter the insurance market with much lower capital than the existing Rs 100 crores and can focus on having special outreach to areas where insurance penetration has been low.
“The current provision as per the statute is that one has to invest Rs 100 crore to start an insurance business in India. We are of the opinion that we should allow multiple differentiated players, such as captive insurers, standalone micro-insurers, niche players and regional entities to enter the insurance space,” Panda said.
“The Rs 100 crore is a barrier rather than a facilitator. We will request the government to amend the Act and remove this so-called minimum requirement and allow the regulator to decide and amend [the limit] time to time depending on the requirement,” he added.
The regulator has set up three-four working groups. These groups will relook at various areas, including Irdai regulations, amendments required to the Act and distribution channels.
”We would also ask the group to look at whether we can have standard products with defined benefits, paramedic covers, particularly for lower-income groups, small traders, shopkeepers, micro-entrepreneurs, farmers etc,” he said.
One of the working groups will also look into technology and data management, the chairman noted.
The IRDAI chief said he would facilitate data analytics for identifying gaps in insurance coverage and assess market needs. It will also embrace emerging technologies to improve efficiencies in delivery of services by insurance companies.
There is also a proposal to allow insurance companies to offer allied and value-added services to policyholders and review the effectiveness of the existing insurance ombudsman system.
Panda further outlined the following as part of his new agenda for the Indian insurance industry.
-Moving insurance supervision towards outcome based and technology driven that is aligned with international standards,
-Moving towards product certification by insurers wherein broad principles laid down by IRDAI will be adhered to by insurers while designing products,
– Rationalization of investment norms applicable to insurers,
-Revamping existing policyholder grievance redressal systems with emphasis on understanding customer pain-points, root cause analysis and corrective action,
-Reviewing effectiveness of existing insurance ombudsman system,
-Taking up insurance awareness campaigns including customer surveys to gauge needs, satisfaction levels and to identify problem areas,
-Leveraging social media / multimedia effectively towards insurance awareness.