Irdai should monitor life insurers' expense management only: Deepak Parekh

Allowing life insurers to distribute health indemnity and NPS products will improve the insurance reach, Parekh said

The insurance regulator should hold life insurers accountable only on expense management limits, much like the concept of total expense ratio (TER) in the mutual fund industry, instead of having various rules monitoring their investments and expenditures, said Deepak Parekh, Chairman, HDFC Life.

In the annual general meeting of HDFC Life, Parekh said, “Today, life insurers can only sell policies at their branches and through employees. They cannot, for example, sell NPS under the national pension scheme or health indemnity covers such as mediclaims. Worldwide, both pension and are very much part of life insurance as they protect people risk.”

“Hence, allowing life insurers to distribute products such as health indemnity and NPS would help improve the much-needed insurance reach across our country,” he added.

Incidentally, the insurance regulator had set up a committee to study the feasibility of allowing life insurance companies to offer indemnity-based health insurance, which currently is being done by general and standalone health insurers only.

Before 2015, life insurance companies were allowed to sell indemnity-based products, as well as benefit-based products. But in 2015, the regulator decided that to allow life insurance companies to sell benefit-based products, but not indemnity-based products.

Parekh further said, insurers, now, have to go above and beyond their regular commitments and offer complementary and value-added services including “need of the hour products” and services like hospital tie-ups, online doctor consultations, pharmacy discounts, telehealth services, and more.

Due to the second wave of the pandemic, Parekh said, the Indian life insurance industry’s business growth has once again taken a hit. But, from the second quarter (Q2FY22) onwards, business is expected to pick up as governments across various states lift restrictions in a phased manner.

“We are operating in an extremely challenging and dynamic environment and would need to invest in technology, skilling and distribution, amongst others to stay ahead of the curve”, he said.  

Commenting on the economy, Parekh said, the overall impact of the second wave of the pandemic on India’s economy is expected to be milder and largely restricted to the June quarter. And, the economy is expected to grow at 8-10 per cent in FY22, albeit on a low base.