Irdai expanded the “use & file” approach to most life insurance products, with the exception of individual savings, individual pensions, and annuities.
Life insurance penetration is 3.2% while overall insurance penetration stands at 4.20%
life insurance firms over a five-year
The Insurance Regulatory and Development Authority of India (Irdai) has suggested premium growth objectives for life insurance firms over a five-year period in a first-of-its-kind recommendation, in an effort to double insurance penetration in the nation.
The insurance regulator has recommended a gross written premium (GWP) growth objective for each insurer in e-mail correspondence to the MDs and CEOs of life insurance businesses.
“Irdai has set each life insurer indicative objectives in terms of total GWP for the next five years,” IndiaFirst Life Insurance deputy CEO Rushabh Gandhi told Business Standard. “It has also volunteered to discuss any regulatory assistance that the insurer would want in order to accomplish the aim.” Overall, this will significantly improve insurance penetration in the nation.”
Because of their vast base, Irdai has recommended a goal of 30% compound annual growth rate (CAGR) in GWP over five years for top-tier insurers, but 50% CAGR for smaller enterprises.
The GWP is the total of the new business and renewal premiums. The regulator has also designated a state in which each insurer should lead the charge to expand insurance penetration.
“Irdai has written personalized e-mails to each company prescribing development objectives.” Targets have been set for all life insurance providers. Over the next five years, the regulator hopes to increase insurance penetration in the nation. Insurance penetration as a proportion of GDP is low, and the regulator hopes to more than double it in the next five years. “Overall insurance penetration will undoubtedly expand if every insurance firm pushes development,” claimed the CEO of a life insurance company.
Questions about an e-mail addressed to Irdai were not answered until the time of publication.
According to the Irdai annual report, life insurance penetration in India is 3.20 percent, with total insurance penetration at 4.20 percent. The rate of insurance penetration is expressed as a percentage of GDP. “Because Irdai has a developmental function, prescribing objectives to insurance firms is fully within its boundaries,” said an insurance industry veteran.
While the regulator has set objectives for individual life insurance firms, it is unclear if insurers would face consequences if they fail to meet those standards.
“There is little clarity on the consequences if corporations fail to meet the aim.” It’s a five-year plan, and the regulator will want us to report on our progress every two months. “As of yet, the regulator has not said that a portion of the MD/salary CEO’s would be related to such objectives,” said the source cited above.
Since Debasish Panda took over as head of Irdai a few months ago, the regulator has implemented a host of regulatory reforms, making it simpler for insurance firms to build new products and bring them to market.
It has also helped to minimize the compliance load on insurance businesses.
Irdai expanded the “use & file” approach to most life insurance products, with the exception of individual savings, individual pensions, and annuities. This effectively implies that life insurance firms may introduce these policies without the insurance regulator’s previous permission. It cut the amount of capital needed by insurance firms issuing policies under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) by almost half.