Insurers manage over 4,500 compliances in a year: TeamLease RegTech

Indian insurance companies have to manage over 4,500 regulatory compliances in a year, including critical requirements on solvency margins, anti-money laundering, and policyholder protection, according to a report by TeamLease RegTech.

 

Compliance officers of an insurance company must keep up with hundreds of compliance requirements mandated by insurance and other regulators. These complexities are further aggravated when a company expands its operations across multiple states. A single-entity insurance company with a corporate office in one state needs to deal with 2,236 unique compliances annually from central and state governments, the report stated.

 

Every new entrant in the business must obtain around 38 certificates, licences, permissions, and approvals under at least 27 Acts and rules at various stages of business from central and state authorities.

 

Key licences required for the insurance business include approvals under various Insurance Regulatory and Development Authority of India (Irdai) regulations, such as:

 

• Irdai (Registration, Capital Structure, Transfer of Shares & Amalgamation of Insurers) Regulations, 2024
• Irdai (Registration of Corporate Agents) Regulations, 2015
• Irdai (Insurance Brokers) Regulations, 2018

  Sandeep Agrawal, co-founder and director, TeamLease RegTech, said, “The government’s allowance of 100 per cent foreign direct investment (FDI) in the insurance sector would further accelerate growth, attracting significant foreign capital and boosting innovation. However, it is crucial to understand the complexities of compliance management that companies face in this space. Insurers operate within an exceptionally complex compliance framework, with a typical general insurer managing over 4,500 regulatory obligations annually, including critical requirements on solvency margins, anti-money laundering, and policyholder protection.”

 

The report suggested that insurers should adopt RegTech solutions to automate compliance processes and reduce manual tracking. Additionally, fostering a compliance-driven culture, led by strong leadership, is crucial to ensuring adherence to evolving regulations and maintaining regulatory alignment across the organisation.

 

Additionally, the report recommended that the regulator should further simplify regulatory reporting and introduce a single-window licensing framework, along with setting up a centralised regulatory repository.

 

According to the report, there were 294 regulatory updates affecting the insurance industry in the last financial year (FY24), with 77 notifications, circulars, guidelines, orders, and exposure drafts from Irdai alone.

 

“A centralised digital repository for all circulars, regulations, and compliance templates would make it easier for insurers to access up-to-date information,” the report suggested.

 

“Embracing compliance automation will be transformative for the industry, supporting the shift towards a cashless, paperless, and presence-less economy. Automation will enable insurers to streamline operations and meet evolving compliance demands with greater efficiency,” Agrawal added.

 

The domestic insurance market, comprising more than 60 insurers—including life, non-life, and reinsurers—has grown at a compound annual growth rate (CAGR) of 17 per cent over the last two decades and is expected to reach a size of $222 billion by 2026. Over the past nine years, the insurance sector has attracted significant FDI, amounting to nearly Rs 54,000 crore ($6.5 billion).