Page 149 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 137

Indian Insurance is Due for Reinvention

- Dr Srinath Sridharan
15 Author, Policy Researcher and Corporate Advisor

Abstract : The Indian insurance sector faces challenges in improving insurance penetration,
consumer rights, and trust. High commission payouts have been a concern but are now being
regulated. There is a need for the industry to acquire consumer trust and differentiate itself from
investment products. Reinvention is necessary by bringing in talent from outside and upgrading
regulatory capabilities for better digital usage. While India has seen digital innovation in banking
and asset management, the insurance sector still lags in terms of innovation.

The insurance sector stands as a pillar of economic strength, playing a vital role in protecting assets,
fostering stability, and driving prosperity within a country’s economy. From shielding individuals and
businesses against risks to supporting long-term investments and promoting financial resilience, the
significance of a robust and dynamic insurance industry cannot be overstated. As we navigate an
increasingly complex and uncertain world, the insurance sector emerges as a critical catalyst for sustainable
economic growth.

Insurance serves as a catalyst for long-term investments, providing individuals and businesses with
the confidence to pursue ambitious ventures. By mitigating risks associated with large-scale projects,
insurance enhances the ability to secure financing, attracts capital from investors, and facilitates
infrastructure development. This support for long-term investments not only spurs economic growth
but also creates employment opportunities, fosters innovation, and strengthens the nation’s
competitiveness on the global stage.

A well-functioning insurance sector plays a pivotal role in facilitating international trade. Trade
credit insurance, cargo insurance, and other risk management products reduce the uncertainties associated
with cross-border transactions. This protection encourages businesses to engage in global trade, fostering
export-oriented growth and attracting foreign investment.

1. Indian Insurance

The Indian insurance industry plays a crucial role in safeguarding individuals and businesses against
various risks. However, achieving Universal Insurance Access by 2047 requires a reset to address several
key challenges - in improving insurance penetration, ensuring consumer rights and protection, and
building trust. High commission payouts, confusion surrounding insurance as an investment product,
and an insular talent pool have hindered progress. To revitalise the sector, a comprehensive reinvention
is necessary, incorporating talent, upgrading regulatory capabilities, and promoting digital innovation.