According to experts, the Irdai’s initiatives have not only helped develop consumer-centric insurance products, but also improved the access by freeing up the distribution model.
As the Insurance Regulatory Development Authority of India (Irdai) marks its silver jubilee year on this Friday, the regulator is preparing the groundwork for a number of regulatory reforms announced in March, which will only take effect from the current financial year. Meanwhile, the industry players are fastening their belts to play their respective roles in this process.
In line with the Malhotra Committee report's recommendations, the Irdai was set up in 1999 as an autonomous body for regulating and taking ahead the insurance industry. On April 19, 2000, it was formally established as a statutory body.
Irdai has been working on improving all aspects of the insurance sector. Looking ahead, here are some of its plans for the industry:
Irdai has streamlined processes for the benefit of Indian citizens. It has impacted the industry's growth. “It has introduced strategic initiatives that have not only increased awareness and reshaped perceptions, positioning insurance as a crucial risk management tool, but have also driven the industry towards providing optimal products and services. This has been achieved by fostering a culture of innovation through its policies and regulation,” Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance told Outlook Money (OLM).
“New endeavors like the innovative Bima Sugam highlight IRDAI's dedication to harnessing digitalization for enhanced insurance reach. Their steadfast commitment to insurers' social and rural obligations also speaks volumes about their holistic strategy, prioritizing and catering to every section of society. As we celebrate this significant milestone, ‘I extend my heartfelt gratitude to IRDAI for its visionary leadership and collaborative ethos. Their guidance, which has been instrumental in fostering a resilient and inclusive insurance landscape in India, is commendable. Through such collective endeavors, we are firmly progressing towards the aspiration of ensuring insurance for all by 2047, in alignment with the esteemed IRDAI Chairman's vision,” added Singhel.
According to experts, over the past quarter-century Irdai has balanced the agendas of regulation and development. “In the past two years, the digital transformation of the industry has been truly accelerated by the authority’s guidance on e-KYC, paperless policies, digital payments, health claims exchange, among others. This underscores the authority’s focus on transition from traditional methods to modern, tech-driven practices. This shift is aimed at not only enhancing customer experiences but also fostering innovation across the industry. As a digital Insurer, Zuno General Insurance, welcomes the progressive thinking and approach and is privileged to be a part of Irdai’s mission of Insurance for all by 2047,” Shanai Ghosh, MD and CEO, Zuno General Insurance told OLM.
Regulator has taken steps to make the industry more robust while also ensuring ease of doing business. “We are also excited about IRDAI's focus on expanding customer protection, demonstrated by its 'Insurance for All by 2047' vision and initiatives like Bima Sugam, Bima Vistaar, and Bima Vahak. We remain committed to working with Irdai for a secure and innovative future, building trust and value for our customers,” Pankaj Gupta, MD & CEO, Pramerica Life Insurance told OLM.
“The regulator has played a pivotal role over the past 24 years in safeguarding policyholders’ interests and providing remarkable support for the development of the sector. Its recent products and distribution reforms have been setting the stage for deepening insurance penetration further, while also creating entrepreneurial opportunities for many in the country,” Venkatachalam Iyer, MD and CEO, TATA AIA Life Insurance said.
The silver jubilee marks a major milestone in regulatory governance. It consolidates 34 regulations with six regulations. The introduction of two new regulations enhances clarity and coherence in the regulatory space. Meanwhile, Irdai is also busy developing master circulars for some reforms following their recent gazette notification.
Major Reforms Done By Irdai Over The Years: Irdai played an important role in liberalizing the insurance sector in India. It allowed private players to enter the market and compete next to the state-owned insurers. Irda opened up the market in August 2000 with an invitation for applications for registrations. Foreign companies were allowed ownership of up to 26 per cent.
Focused on health insurance, Irdai has introduced comprehensive regulations that ensure better coverage and protection of policyholders against medical expenses. Moreover, making it easier for consumers to compare offerings from different insurers, Irdai has made it mandatory to standardize certain insurance products like health insurance policies.
To improve transparency of charges and benefits for investors in ULIPs, Irdai has introduced new regulations. To promote digitalization in the insurance sector, Irdai has encouraged insurers to adopt online platforms for policy issuance, claims processing, and customer service. By establishing guidelines for fair treatment, quick claims settlement, and grievance redressal mechanisms, Irdai has been emphasizing enhancing policyholders' interests.
Moreover, to promote micro-insurance and rural insurance products to extend insurance coverage to underserved segments of society, Irdai has taken initiatives. Ensuring that insurers maintain adequate capital levels in relation to the risks they underwrite, Irdai has introduced risk-based capital norms for insurers.