India stands at a critical juncture in its economic development, with the insurance sector poised to enhance its trajectory significantly. In an interview with Asia Insurance Review, Debasish Panda, chairman of the Insurance Regulatory and Development Authority of India (IRDAI), shared insights into the future of insurance in India and the authority's ambitious goal of providing coverage for every citizen by the year 2047.
Panda noted that the insurance industry plays a fundamental role in the financial ecosystem, vital for economic resilience and sustainable growth. Currently, India's insurance sector is witnessing robust growth, with a compound annual growth rate (CAGR) projected at 7.1% in real terms over the next five years. As of now, the industry manages over $833 billion in assets, facilitating infrastructure advancement, promoting innovation, and generating substantial employment opportunities.
Highlighting the multifaceted function of insurance, Panda stated, “By providing protection against various risks spanning across life, health, property, MSMEs, Nat CAT, it enhances the resilience of individuals and businesses during economic shocks and crises.” He emphasized that this provision of security is essential for promoting financial inclusion and fostering long-term savings.
Under the initiative dubbed "Insurance for All by 2047," the IRDAI aims to ensure that every individual and business in India is protected. Panda explained that a robust regulatory structure is fundamental to this vision, one designed to be principle-based and supportive, facilitating a blend of innovation, data use, and heightened ease of doing business.
With insurance penetration in India currently low, Panda identified significant growth opportunities. He pointed out a necessity for addressing traditional gaps while also focusing on underserved markets such as Micro, Small and Medium Enterprises (MSMEs) and emerging risks that include climate change and cyber threat challenges. This approach would necessitate a broader spectrum of insurance providers and the creation of tailored products, which could be delivered through a hybrid model of physical and digital channels.
To support this ambition, a series of initiatives have been introduced, collectively known as the 'Bima Trinity.' The Bima Vistaar programme is focused on bringing insurance to lower-income demographics through simple, benefit-based products. The Bima Vahak initiative aims to establish a localised insurance distribution force centred around women, while Bima Sugam seeks to create an e-marketplace that democratizes access to insurance.
Panda outlined the importance of collaboration among various stakeholders in this mission, including governmental bodies, insurers, technology firms, and local community organisations. Additionally, a state-level insurance strategy has been launched, compelling insurers to foster increased inclusion in targeted states.
In discussing the ongoing reforms within India's regulatory framework, Panda highlighted a comprehensive review that has led to significant changes. Over the past two years, the IRDAI has transitioned from a rigid, rule-based framework to a more fluid principle-based approach. Key reforms include streamlining processes for applicants, reducing the regulatory burden, and enhancing capital-raising capabilities for insurance firms.
Further demonstrating a commitment to innovation, Panda spoke on the integration of technology into the sector, stating that the insurance industry is “moving from paper to pixels and from bricks to clicks.” The regulator's revamped regulatory sandbox allows insurers to experiment with innovative products in a controlled setting, and a dedicated InsurTech team has been established to advance technology solutions within the industry.
Panda noted, “These developments, alongside advancements in data analytics through the Insurance Information Bureau of India, are vital for addressing increasing demands for both traditional and novel insurance products." He underlined the urgent need for diverse insurance players to cater to India's varied risks and demographics, admitting that the current 72 insurers in the market are insufficient to meet surging demand.
Specialised insurance products for sectors such as agriculture, which employs nearly half of India's workforce, are critical given the rising incidents of extreme weather events. Furthermore, protection against emerging threats like cyber-attacks is becoming increasingly urgent in light of India’s expansive infrastructure projects, which span various sectors, including transportation and renewable energy.
In conclusion, the dynamic landscape of the Indian insurance market, bolstered by technological integration and supportive regulatory reforms, presents not only a tremendous potential for growth but also underscores the need for a diverse and proactive insurance sector to meet the unique demands of the population.
Source: Noah Wire Services