Debasish Panda, chairman, IRDAI
IRDAI chairman Debasish Panda said the IRDAI will also suggest to the government to provide tax benefits under 80C for long term motor and housing policies.
Panda revealed that the IRDAI is considering to give freedom to the boards of insurers to fix the salaries of their CEOs within certain band and for appointing independent directors
“We are also working to prune drastically number of circulars currently numbering over 540 to just three or four. We would like to have three to four master circulars and one or two regulations,” stated Panda
IRDAI projects Go Digit,with a target of Rs 1,50,000 crore of premium by 2027 as the largest general insurer in the country
Hyderabad:
The penetration of non-life insurance industry has further moved up to 1.18 per cent in 2021-22 from 1.0 per cent in 2020-21, said Debasish Panda, chairman, IRDAI.
Panda, while addressing the CEOs of non-life insurance industry as part of 2nd 2–day summit of CEOs of the Indian Insurance industry on Friday, termed as “ Bima Manthan-the Road Ahead’, however said 1.18 per cent of penetration of the non-life sector in the country – after two decades after opening up the sector is quite low on global standards and set a high target of 2.52 per cent penetration and Rs 11.73 lakh crore of premium for the industry by FY 2027-28.
The general insurance industry had ended FY 2021-22 with a total premium of Rs 2.20 trillion and have to grow at 40 per cent annually to achieve targets set by the IRDAI.
IRDAI also listed out the target for all the non-life insurance companies for next five years which is fixed onthe basis of the country’s GDP growth and rate of inflation, said Panda,
According to the IRDAI’s scheme of things, five year old Go Digit General Insurance, claiming to be an insurtech, with a target premium of Rs 1,50,000 crore of premium by 2027 will emerge as the largest general insurer in the country dislodging the current industry leader New India Assurance from the position.
The company promoted by the Indian born Canadian billionaire Prem Watsa and Kamesh Goyal,a former senior of official of Allianz, had mobilsed a total premium of Rs 4,700 crore in 2021-22.
Jasleen Kohli, MD and CEO, Digit Insurance, said they needed two things to achieve this kind of target. First, open architecture in distribution where banks and agents are free to sell any company’s products and second, lowering expense management of general insurance companies spurring cheaper products for customers and competition among the insurers.
IRDAI’s FY 2027 premium target for other insurers including the country’s largest general insurer New India Assurance has been set at Rs 99,00 crore, ICICI Lombard General Insurance (Rs 97,000 crore) for both HDFC Ergo General Insurance and Bajaj Allianz General Insurance(around Rs 69,000 crore), Acko General Insurance Rs 78,000 crore) United India Insurance(Rs 48,000 crore), SBI General and Oriental Insurance(Rs 42,000 crore), IFFCO Tokio General Insurance(Rs 44,000 crore), Star Health Allied Health Insurance Company(Rs 73,000 crore), for both National Insurance Company and Reliance General Insurance (Rs 40,000 crore), Tata AIG General Insurance(Rs 54,000 crore), IFFCO Tokio General Insurance Rs 44,000).
“Small players should grow more aggressively and big players should grow much bigger. This is what we are looking at. Our target for the current year is Rs 3 trillion but if the industry can achieve Rs 4 lakh crore, I promise, the industry will be rewarded by the country’s highest dignitary,” said Panda.
However, various CEOs said the target are stiff but still doable and raised the issues of capital and profitability, which may act as constraints for growing at a faster speed.
Both Suchita Gupta, CMD, National Insurance Company and Madhulika Bhaskar, general manager, New India Assurance pointed that the government as owner wants them to more focus on profitability than top line growth.
Panda also revealed that the IRDAI is considering to give freedom to the boards of insurers to fix the salaries of their CEOs within certain band and for appointing independent directors.
Panda said the IRDAI will also suggest to the government to provide tax benefits under 80C for long term motor and housing policies.
“We are also working to prune drastically number of circulars currently numbering over 540 to just three or four. Maximum,we would like to have three to four master circulars and one or two regulations,” stated Panda.
There are enough existing opportunities like PM Kisan Yojana, PM Awas Yojna, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana and 6 crore MSMEs which can be tapped by the general insurers with bundled products to grow their business, Panda said adding that there are 40 crore people in India called as `Missing Middle’ who don’t have health covers .
“We have also reduced solvency ratio for crop insurance which will release Rs1400 crore of capital that can be deployed for the new business,” added Panda.
He said the balance in the 45 crore Jan Dhan accounts – that started with zero balance some years back- is now about Rs 1.5 lakh crore. Similarly, the central government gives Rs 6,000 per annum to small and marginal farmers which is paid online out of which farmers can also pay their premiums to insurers in similar ways.
Asking the industry to chalk out strategies to tap these segments which in turn would increase insurance penetration amongst the rural segments, Panda said there should be an information technology interface between the insurers and the bankers.
IRDAI will involve itself in sorting out the regulatory issues by taking up the issue of banks and insures working together to reach out to rural customers and developing new products, with the Reserve Bank of India (RBI), Panda added.
The regulator also said, once the software interface between the two organisations, banks and insurers, is there, then the certificate of insurance for Pradhan Mantri Suraksha Bima Yojana(PMSBY) can be sent to the policyholders.
The IRDAI chairman told the industry captains that the authority is working on a mission mode on certain issues like -developing and implementing risk based supervisory with a knowledge partner;establish framework for risk based capital in two to two-and-half years time;strategies for implementing applicable IFRS/Ind AS accounting standards; developing an ecosystem for InsureTech and -strengthening the policyholder grievance redressal mechanism and naming it as “Bima Bharosa” whose portal can be multilingual.
Meanwhile IRDA has asked the non-life insurers to adopt various states to facilitate insurance penetration in that region. Bajaj Allianz General Insurance has been assigned (Uttar Pradesh), New India Assurance(Bihar and Meghalaya),ICICI Lombard General Insurance(Rajasthan and Tripura), Reliance General (Karnataka), Oriental Insurance Company(Madhya Pradesh and Lakshadweep),Tata AIG General Insurance(Maharashtra and Manipur), Cholamandalam MS General Insurance (West Bengal),SBI General Insurance (Odisha),Future Generali General Insurance(Kerala),HDFC Ergo (Tamil Nadu and Puducherry), Iffco Tokio General Insurance(Delhi and Mizoram)Star Health (Andhra Pradesh)
We(PSU general insurance industry workforce) are still working on a salary of 2012. Already burdened with generous govt. policies and unlimited motor third party liabilities. You have given LIC a decent wage revision. You have given banks(almost 80% on loss) a decent wage revision. Why PSU general insurance industry employees are treated as beggars.
Seriously ?. Look at the Employees of Pvt Insurance Players .
Compare your Productivity Vs ur Private Players’ Productivity.
Then Comment on such kind of things !. Too lame to speak about “Salary thing”
Nothing has been mentioned about the National Insurance Company. (No targets)
Or did the IRDAI already plan to end the existence of the company ??
Mr. Panda is simply brilliant with a macro view and real growth orientation. The next big step he should take is to shut shop for the PSU Insurers. They have no right to remain in the market . Mr. Panda is the best IRDAI Chairman India has so far seen.
No doubt,IRDA Chairman suggested a good road map for the growth of General Insurance business. But at the same time root cause of the downfall of business should be explored.In my opinion in PSU general insurance companies,the system of claim settlement is not systematic in comparison to private insurers
No doubt the targeted growth is well within the potential of the country like India but sadly do we have the right kind of environment and architecture to take non life general insurance industry to the desired levels… the unethical market practices, ineffective regulator,indecisive government policies and badly demoralised PSU staff are the serious impediments for the road ahead.
Govt. needs to introduce new laws to implement certain compulsory insurance, especially for MSMEs, small retailers, Pvt firms, and give relaxation in terms of taxes. We need to learn from other countries where insurance is mandatory for certain products such as IDI, liability, cyber, etc. Also need certain ways to implement to avoid unnecessary competition among the insurers and guidelines for brokers.