IRDAI Chief Calls for Roadmap to achieve ‘Insurance for All by 2047’
Mr Debashish Panda, Chairman, Insurance Regulatory and Development Authority of India (IRDAI), today called upon all stakeholders to come together to help achieve the nation’s aspiration of providing insurance to every person in India by the year 2047, which marks 100 years of our Independence. He was delivering the inaugural address at FINCON 2023, the 22nd annual insurance conference organized by Federation of Indian Chambers of Commerce and Industry (FICCI).
While the insurance industry in India is more than 20 years old with a total premium of more than Rs 10 lakh crore and an AUM of Rs 59 lakh crores in FY 2023, the industry had registered 16 per cent growth in both life and non-life products in February 2023. Calling upon the gathering that comprised representatives of all major insurance companies to help in driving penetration, he said, “This is a big responsibility which lies with you.”
He conceded that universal access to insurance is not an easy task. It would be necessary for all intermediate functionaries to come together to reach the last mile. They would have to make use of technology and employ better distribution practices. The various platforms like Bima Sugam, Bima Vistaar and Bima Vahak, that the Government has put in place, will be very useful in this endeavour.
Mr Panda informed that in the recent past, three new insurance companies had been commissioned, two in life and one in general. He added that the new set of regulations are making the insurance sector more attractive for investors and promoters and that insurance companies should also look at augmenting their own capital. He pointed out that the regulatory and supervisory framework is moving to a risk-based framework and switching over to international financial reporting standards to help the industry, companies and the regulator to have a real time risk profile.
Mr Panda underscored the importance of state and district level coordination for enhancing insurance penetration. He urged the industry members to use the vast network of ASHA workers and Aanganwadi workers etc. to reach the last mile for deeper penetration and a relationship of trust which is paramount in insurance business.
The keynote address was delivered by Mr Siddhartha Mohanty, MD & In-Charge, Life Insurance Corporation of India. “The last three years had been quite challenging for all of us,” he said, referring to the pandemic and the lockdown. “Today the world acknowledges the leadership in the way this challenge was handled in India. It gives us direction to march in a focused manner towards our goal of ‘insurance for all’ by 2047,” he added.
Mr Mohanty noted that by 2047 India’s population is projected to reach 2.64 billion which will make it the world’s most populous nation. “We are already in a critical phase and have to make use of this opportunity,” he stated. According to him, areas of concern are the need to improve penetration and to achieve greater insurance coverage for all customer segments with customer-centric products. “The journey will be challenging and exciting,” he averred.
Mr Alpesh Shah, Managing Partner, India and Managing Director and Senior Partner, BCG, delivered the theme presentation. He highlighted the 3A framework of ‘Awareness, Accessibility and Affordability’ for the industry as enunciated by the regulator to be able to achieve its aspirational target.
The inaugural session was followed by a panel discussion on ‘Insurance for All’, moderated by Mr Pranay Mehrotra, Managing Director & Senior Partner, BCG and BCG India Insurance Lead.
Mr Ritesh Kumar, MD & CEO, HDFC ERGO General Insurance Company Ltd., highlighted some of the challenges that needed to be addressed. “More than 45 per cent of vehicles on the road do not have third party insurance,” he said. He drew attention to the fact that as far as health insurance is concerned, the top and bottom segments of the population are well covered, but there remains the ‘missing middle’ comprising 400–500 million people. He felt that a larger thought process needs to go into how these challenges can be addressed.
“The over awareness about retirement is that it is important but not urgent; that segment gets deprioritised,” felt Mr Prashant Tripathy, MD & CEO, Max Life Insurance Co. Ltd. Some other figures that he presented were that 40 per cent of the people have no knowledge about savings; 90 per cent of the people feel that they will be healthy when they retire; and 70 per cent of the people believe that retirement is ‘cool’. These facts arose out of a survey carried out by Max Life Insurance. In his view, it is more important for insurers to work in a coherent manner within the ecosystem rather than merely creating clusters for products.
“If we are not able to get insurance into the school curriculum, at least let us start the conversion,” declared Mr Mahesh Kumar Sharma, MD & CEO, SBI Life Insurance Company Ltd. He underscored the need to build trust in the customer. This can only be done through more ‘normal’ conversations around insurance. He felt that the media could be a great support in this endeavour. “Unfortunately, most conversations today are about tax benefits or tax exemptions or changes in the tax regime,” he observed.
Mr Devesh Srivastava, CMD, GIC Re, felt that insurance products need to be very simple. “Distribution is what makes or mars reinsurance,” he pointed out. The need is to have simple, flexible products that can be pushed. He suggested that products can have basic pricing that can be enhanced through the same KYC as the customer’s purchasing power improves. “We have to start thinking in these terms,” he said.
Speaking about state-level insurance plans, Mr Satyajit Tripathy, CMD, United India Insurance Company Ltd observed that all penetration in the hinterlands is driven by Government schemes. It is very advantageous for insurance companies to use the Government machinery. The awareness about insurance is low in the rural areas. “People in cities have awakened to the need for insurance. But it has not percolated beyond that,” he added.
“The group which I come from focuses on the common man,” said Mr Manoj Kumar Jain, MD, Shriram Life Insurance Company Ltd. “We are known for working with the common man, and our premium is one fourth of the average industry premium.” This showed that there is a huge market in tier 3 and tier 4 towns. All of them require insurance, although they are not in the Government’s radar. Mr Jain also pointed out that small town agents are very tech savvy and 90 per cent of their processes are paperless, helping them to maintain their cost ratios.
Earlier, Mr Bhargav Dasgupta, Chairman, FICCI National Committee on Insurance, welcomed the gathering and Ms Jyoti Vij, Additional Director General, FICCI, proposed a vote of thanks.