Page 8 - Insurance Times February 2021

the implementation of the policy. was to enable them to sell simple insurers - reported gross premium
There are indications that the policy is insurance products to narrow the underwritten to the tune of Rs
likely to be part of the budget protection gap in the country. 17,935.97 crore, compared to Rs
announcements for 2021-22. Khuntia also urged more life insurance 16,048.86 crore in the same period

The PM has also asked the officials to companies to go public and list last year. In November, they had
go through the scrapping norms of themselves on stock exchanges as the reported a 2.7 per cent growth in
defence and railway ministries and put disclosures would increase premium, while in October and
together the final proposal quickly, transparency and build trust. September, premiums earned declined
including the proposed incentives for "Insurance is a social protection 0.41 per cent and 4.41 per cent,
people to junk their old vehicles. scheme based on trust, and increasing respectively.
Sources said Modi has asked the trust will help improve insurance pen-
transport ministry to compress the etration," he said. Budget 2021: How higher
timeline for full implementation of the According to LIC chairman M R Kumar, FDI cap in insurance will
scheme instead of stretching it up to life insurance business in India is
2025. expected to grow 12% to 15% in benefit policyholders
"There is a perception that people coming years and will be a major job- Finance Minister Nirmala Sitharaman
would go for scrapping their vehicles creator. Pointing out the protection in the Union Budget for 2021-22 on
provided there is a proper mechanism gap in India, Kumar said, "The Covid Monday proposed to liberalize foreign
and there are enough scrappage pandemic has shown more direct investment (FDI) in Indian
centres across the country. So, there emphatically than ever how insurance companies to 74% from the
is a need to increase the number of inadequate our efforts have been in existing 49%. While the much-awaited
scrappage centres and automated insuring India over the last seven move is expected to provide access to
fitness testing centres for the smooth decades, since independence… and fresh capital to some of the insurers,
rollout of the proposed policy," said an how crucial a role life insurance plays experts believe that the decision may
official. in ensuring resilience." also benefit individual policyholders.

Petrol pumps may sell Kumar said that the penetration of life According to Prasun Sikdar, managing
director and chief executive officer,
insurance stood at 2.8% in FY19, which
insurance marginally increased from the level of ManipalCigna Health Insurance, “The
Petrol pumps and gas dealerships may 2.7% in FY18. "With the exception of government’s move to increase the FDI
start distributing standardised the years between 2006 and 2010, life limit will further attract foreign capital
insurance products if the sector insurance penetration in India has where required, ensure higher
regulator's efforts are successful. remained between 2% and 3%. For penetration and bring a new wave of
There are nearly 61,000 fuel pumps in the last one decade now, India's life transformative change to create a
the country and almost 25,000 LPG insurance penetration has remained more value-based affordable
dealers who can add to the insurance below the world average," he said. healthcare for all Indians."
distribution capability in smaller towns The life insurance sector in India was
and even villages. Non-life insurers see 12% opened up two decades back after the
Additionally, the regulator IRDAI has growth in December government had first allowed foreign
already directed companies to come companies to own up to 26% in Indian
out with simple standardised products premiums insurers in 2000.
on health and term insurance and will General insurers have recorded around Industry experts believe the
shortly come out with guidelines for 12 per cent year-on-year (YoY) growth government’s latest move will make the
standard annuity products, which can in gross premiums underwritten in sector more competitive, transparent
be brought without much advice. December. This comes after low single- and efficient. “As an industry that plays
IRDAI chairman S C Khuntia said that digit growth in November and contrac- an important role in securing the
the regulator was in talks with the tion in September and October. nation, the proposed increase will
ministry of petroleum to permit In December, non-life insurers - that provide companies with committed
distribution of insurance at fuel pumps include general insurers, standalone funds to improve the penetration of
and gas agencies. He said that the idea health insurers and specialised PSU insurance in the country.

The Insurance Times, February 2021