Irdai may consider implementing risk-based supervision model: Keki Mistry

India's overall insurance penetration reduced to 4% in FY23 from 4.2% in FY22

The country's insurance regulator may consider implementing a risk-based supervision model, similar to that in the banking sector, which will establish principles for managing operational, market, and governance risks in the insurance industry, said Keki Mistry, chairman of HDFC Life.

Mistry, during the company's 24th annual general meeting, underscored the positive strides made by the Insurance Regulatory and Development Authority of India (Irdai) in recent years, such as enhancing commercial and operational flexibility through management expense regulations, raising sub-debt limits, and introducing the Bima Trinity – Bima Vistaar, Bima Vahak, and Bima Sugam.

Additionally, he highlighted other initiatives by the insurance regulator, including the establishment of state-level insurance committees, increased payouts for early policy surrenders, and relaxed regulations governing the opening of new branches by insurance companies.

“These regulations would increase ease of doing business, encourage development of longer-term products, and improve persistence, thereby creating value for customers,” Mistry said, adding that given the low insurance penetration in the country, expansion into Tier 2 and Tier 3 cities by the insurance companies will drive growth.

According to the Irdai annual report, life insurance penetration in the country stands at 3 per cent in FY23, while non-life insurance penetration stands at 1 per cent. And, India's overall insurance penetration reduced to 4 per cent in FY23 from 4.2 in FY22.

Mistry also highlighted the Reserve Bank of India (RBI) and the Central government “did a truly outstanding job in managing the economy during the last four years”.

“This has contributed significantly to making India the fastest growing major economy in the world,” he said.