“Globally, the private financial sector has repeatedly shown itself to be adept at selective or misinterpretation of principles-based regulations to its benefit,’’ cautioned the report released on Monday adding that when it comes to financial products, globally, ‘soft-touch’ regulations have seldom worked over a sustained period in delivering customer satisfaction and value for money, said the Survey
New Delhi: Even as the Indian insurance regulator IRDAI is currently pushing for principles-based regulations in the insurance industry, the latest Economic Survey has flagged off some concern over its adoption by the private sector players..
“Globally, the private financial sector has repeatedly shown itself to be adept at selective or misinterpretation of principles-based regulations to its benefit,’’ cautioned the report released on Monday adding that when it comes to financial products, globally, ‘soft-touch’ regulations have seldom worked over a sustained period in delivering customer satisfaction and value for money, said the Survey. .
According the Survey, to make the Indian insurance industry future-ready and align with global standards, significant progress has been made towards the implementation of the Risk-Based Supervisory Framework, Risk-Based Capital Framework, and International Financial Reporting Standards in the country.
However, the Survey has expressed concern over the prevalent mis-selling in the Indian life insurance industry and larger complaints of non-settlement of claims by the general insurers.
The Survey has said `industry has to think and work for the long term. Otherwise, insurance penetration will not rise.’’
Data for FY23 showed a decline in insurance penetration. For the anticipated rise in insurance penetration to materialise, the industry has to become more customer-friendly, added the report.
According to the Annual Report of IRDAI for FY23, the centralised grievance portal received over two lakhs of complaints during the year. If the Life Insurance Corporation of India is excluded, over 50 per cent of the complaints against life insurers were about unfair business practices, a euphemism for mis-selling. Further, 66 per cent of the complaints against general insurers were about claims, including delayed and denied settlements, said the report.
Insurance penetration as a per cent of GDP is projected to grow from 3.8 per cent in FY23 to 4.3 per cent by FY35. The growth in life business (premiums up 6.7 per cent in 2024-28) is likely to be supported by rising demand for term life cover by the middle class, the country’s young population and increasing industry adoption of Insurtech.
Non-life premiums are projected to grow at an annual average of 8.3 per cent during 2024-28, driven by economic growth, improvement in distribution channels, government support and a favourable regulatory environment.