Insurance for all: GoI's Vision 2047 for the Insurance Sector

In its latest press release, the Insurance Regulatory and Development Authority of India, or the IRDAI, has committed itself to achieve the objective- 'Insurance for All' by the year 2047. In this supposed vision of the IRDAI for India's Insurance sector, every citizen must have appropriate life, health, and property insurance coverage. Also, every business Enterprise, be it public or private, must be supported by appropriate Insurance Solutions. Both these initiatives will make the Insurance Sector in India lucrative on a global scale.

Why this new commitment from the IRDAI?

The IRDAI is hell-bent on achieving this new objective. Accordingly, the Authority is making strives towards creating a progressive, robust, and multi-dimensional regulatory architecture to foster a conducive as well as a competitive environment for Insurance Businesses. This will lead to wider choices, more accessibility, and general affordability to insurance policyholders.

Vision 2047: Part of India's grand vision for citizen's Financial Inclusion

This landscape reform by IRDAI is rooted in the Government of India's vision of Financial Inclusion. The Central Government is pushing for a strong emphasis on accelerating financial and insurance reforms.

How can the IRDAI materialize Vision 2047 for India?

The IRDAI hopes to holistically strengthen the three pillars of the Insurance Ecosystem of India, such as insurance policyholders, insurance companies or insurers, and insurance intermediaries.

This IRDAI can strengthen its inherent structure by accomplishing the following tasks:

• Ensure availability of suitable insurance products to the needful consumers
• Enable Robust Grievance or Dispute Redressal Mechanism
• Attain benchmarks in Ease of Doing Business in the country's Insurance sector
• Ensure the alignment of the Regulatory Framework with the prevalent market dynamics
• Boost innovation in the Insurance sector
• Enable competition in the Insurance Market
• Enable distribution efficiencies of various insurers and insurance intermediaries
• Mainstream technology towards a principle-based Insurance Regulatory Regime

Insuring India by 2047: progress till now

The IRDAI has already begun working towards the objective. The Regulatory Authority has made amends to various regulations proposed and placed for stakeholder review and comments. The Authority also held a series of discussions and interactions with the involved Insurers, and their intermediaries, such as:

• Individual Agents
• Corporate Agents
• Insurance Brokers
• Insurance Marketing Firms
• Insurance Experts

The Authority carried out a careful evaluation of comments and suggestions by the involved parties and placed the amendments to the proposed regulations before the Insurance Advisory Committee.

Note: An Insurance Advisory Committee is a standing committee for consultations commissioned under the IRDA Act of 1999.

First Step towards the Vision: Amending the Insurer's registration procedure

The IRDAI has approved some of the critical proposals in the 120th Meeting held at the IRDAI's headquarters in Hyderabad in November 2022. Let us brief you on the first step in the direction, i.e., the Registration of Indian Insurance companies.

The IRDAI has proposed amendments to regulations pertaining to insurance companies' registration in India. It was aimed at promoting Ease of Doing Business. They also vowed to simplify the existing registration procedure for setting up an insurance company in India. Let us detail you one by one:

Optional SPV Investment

The IRDAI has made the Investment through Special Purpose Vehicle optional for Private Equity Funds. This amendment will enable the PE funds to invest directly in the registered Insurer firms, thus providing more flexibility to its structure.

Subsidiaries as Insurer's Promoters

Following the amendments, the IRDAI has permitted the subsidiaries of the Insurance Companies to act as the promoters of Insurer Firms, subject to conditions.

Different Thresholds for Investors and Promoters

The IRDAI has termed the entities with investments up to 25% of the paid-up capital as a single investor and 50% of the paid-up capital for all investors collectively as an Investor in the Firm. Entities with investments over and above 50% will be treated as a promoter of the Firm. Earlier, the IRDAI earmarked the threshold as 10% for individual investors and 25% for all investors collectively.

Stake Dilution of the Promoter

The IRDAI has introduced a new provision that allows the promoters to dilute their stake up to 26%. However, such a dilution is subject to the condition that the Insurer must have a satisfactory solvency record for the preceding five years. Also, the Insurer must be a listed entity.

Fit and Proper Criteria for Investors and Promoters

The IRDAI has included indicative criteria for the determination of the 'Fit and proper' status of the investors & promoters of the Insurer Firms.

Lock-in period of Investments

The IRDAI has stipulated the lock-in period of investments for both the investors and promoters of the Insurance Companies based on the age of the Insurer.

Increase in tie-up limits for Corporate Agents and IMFs

To enable the policyholders to have broader access and an array of choices to insurance products, the maximum number of tie-ups for Corporate Agents as well as the Insurance Marketing Firms has been increased. These Insurance intermediaries can facilitate the reach of insurance products to the last mile through various distribution channels.

A Corporate Agent can engage with 9 Insurers instead of 3

With the latest amendments, a Corporate Agent can now tie up with nine Insurer firms instead of three insurers previously in each line of Life, General, and Health insurance business to distribute their insurance products.

IMFs also soar from 2 to 6 Insurers

Now, the Insurance Marketing Firms can also tie up with six insurers instead of two in each line of the Life, General, and Health insurance business to distribute their insurance products. In addition, the IMF's area of operation has been expanded to cover an entire state where the registration takes place.

If you wish to know further about the latest amendments from the IRDAI or want to apply for Insurance Company registration, then you can connect with the Insurance experts at Registrationwala.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.