Page 11 - The Insurance Times August 2022

nies at the state level and a big hike in top-tier insurers because of their large
IRDAI changes key rules for
the premium collection target in the base, it has suggested 50 percent CAGR
insurers
next five years to deepen insurance for smaller companies.
penetration in the country. The Insurance Regulatory and Devel-
GWP is the sum of new business pre-
opment Authority (Irdai) has made im-
IRDAI Chairman Debasish Panda said mium and renewal premium. The regu-
portant changes to rules governing
insurance companies should become lator has also identified a state for each
sales, investments and commissions
members of the State Level Bankers insurer where it should spearhead the
charged by insurance companies as part
Committee (SLBC) and boost the push for increased insurance penetra-
of the ongoing deregulation agenda.
growth of the sector. "States and insur- tion.
The changes were passed at the
ers will benefit from the inclusion of in-
"IRDAI has sent separate e-mails to in- regulator’s board meeting earlier this
surers in the SLBC. Quite a bit of AUM
dividual companies prescribing growth
week and are likely to be implemented
(assets under management) is going
targets. All life insurance companies
by the end of the quarter, two people
into the developments in the state,"
have been given targets. The regulator
familiar with the decisions said.
Panda said at a conclave of insurance
aims to grow insurance penetration in
CEOs in Hyderabad recently. Among the decisions is allowing banks
the country over the next five years.
to sell insurance policies of up to nine
"I'm going to request the RBI and the The insurance penetration as a percent-
insurance companies, the biggest dis-
ministry to include insurance in the age of GDP is low and the regulator
tribution reform since the regulator al-
SLBC Forum," he said, adding that each wants to double it in the next five years.
lowed corporate agents like banks to
state will be assigned to one or two in- If every insurance company drives
sell policies from three insurance com-
surance companies for close coordina- growth, the overall insurance penetra-
panies as part of the open architecture
tion. tion will certainly increase," said the
policy implemented since April 2016.
CEO of a life insurance company.
IRDAI wants life firms to The Irdai minutes are likely to be
finalised in the next few days and
eye 50% premium growth No decision on disclosure
changes are likely to be implemented
in 5 yrs of insurance commissions: in September.
In a first-of-its-kind advisory, the IRDAI IRDAI The regulator has also decided to allow
has proposed premium growth targets insurance companies to tap fund rais-
An IRDAI-appointed committee's pro-
over a five-year period for life insurance ing options, like through the debt mar-
posal to make it mandatory to disclose
companies, in a bid to double insurance insurance commissions charged on poli- ket, without prior approval from the
penetration in the country. cies has rekindled an old debate, forc- Irdai.
In a communication to the MDs and ing the regulator to clarify that no deci- All these moves are part of the new
CEOs of life insurance companies, the sion has been made. Irdai chairman’s reform agenda, which
insurance regulator has suggested a
The committee of CEOs formed to rec- has focussed on lightening regulations,
gross written premium (GWP) growth
ommend changes in finance, costing giving companies more decision mak-
target for each insurer.
and policies of insurance had recom- ing powers and removing old laws.
"IRDAI has given each life insurer in- mended that the exact amount of com- “The decisions made in the board meet-
dicative targets in terms of total GWP missions charged on each policy should ing are a part of the same agenda,” said
for the next five years," said Rushabh be mandatorily printed in the interest one of the persons cited above. “The
Gandhi, deputy CEO, IndiaFirst Life In- of transparency. clear focus is to ensure easier regula-
surance, told. "It has also offered to dis- tions and remove unnecessary regula-
The Insurance Agents Welfare Associa-
cuss any regulatory support that the tion (IAWA) has opposed the move say- tory influence or red tape. Some of these
insurer may need to meet the target. things needed to be changed because
ing that it will impact livelihoods and
Overall, this will help increase the in- they are not suited for the current busi-
hurt the penetration of insurance. In a
surance penetration in the country sub- ness environment, which is more dy-
letter to IRDAI chairman Debasish
stantially."
Panda, IAWA said the move if imple- namic. Freeing up some decisions from
While IRDAI has proposed a target of mented will be like printing the mar- Irdai will also free bandwidth and help
30 percent compound annual growth gins of service providers or vendors on the regulator focus on more important
rate (CAGR) in GWP over five years for their products. things.”
The Insurance Times, August 2022 11