 "Ajay Seth")
Nearly five months after Debasish Panda’s tenure as chairman of the Insurance Regulatory and Development Authority of India (Irdai) ended, the central government on Wednesday appointed Ajay Seth, former Department of Economic Affairs secretary, his successor.
Seth’s will be a term of three years.
Among his priorities would be stabilising the industry, which is going through regulatory changes, and as a result has seen a slowdown in growth, industry experts said, adding, Seth would be occupied with, among other things, framing regulations on amendments to the Insurance Act.
“We do not expect any major policy changes in the next few months. The government appears focused on stabilising the insurance sector, especially given the significant reforms introduced during the previous regime. Over the next six-eight months, the new leadership will focus on assessing the impact of the existing regulations before charting the path forward. That said, some regulatory changes already set in motion are likely to continue,” said the chief executive officer (CEO) of a private insurance company.
“Similar to what we have observed with the Reserve Bank of India under Sanjay Malhotra and Securities and Exchange Board of India under Tuhin Kanta Pandey, where there has been a slight shift in approach, we believe this appointment follows a similar trajectory,” he added.
Another CEO said: “The new chairman will have his hands full, with a slew of changes expected to be introduced in the Insurance Act during the ongoing monsoon session of Parliament. Once the amendments are passed by Parliament, Irdai will be tasked with framing the corresponding regulations, a process that is likely to demand significant time and attention from the new chairman.”
Meanwhile, Seth takes over at a time when misselling in insurance, especially through the bancassurance channel, is being talked about. Experts said this would be on top of Seth’s agenda.
Meanwhile, penetration will be another key focus area for the new Irdai chairman because despite the best efforts of Panda, insurance penetration remains low.
According to the latest data, insurance penetration in 2023-24 was at 3.7 per cent as compared to 4 per cent in 2022-23. Life-insurance penetration declined marginally to 2.8 per cent from 3 per cent while the penetration of the non-life insurance industry was flat at 1 per cent during the year.
Irdai has set an ambitious target of “Insurance for All by 2047”.
The past regime has left a few unfinished tasks. They are: A risk-based capital framework; risk based supervision framework; International Financial Reporting Standards (IFRS), among others. Further, the project of the regulator to launch an Amazon-like marketplace to sell, buy, and service insurance — Bima Sugam — is yet to be launched.
Also, the appointment comes up at a time when the new insurance law proposes significant reforms like 100 per cent foreign direct investment (FDI) in the sector.
“We hope the new regulator focuses on IFRS. I think he might be more focused on a better mechanism to manage complaints from aggrieved customers. He might have to focus more on insurance penetration and curbing misselling,” said a third private-sector insurance company CEO.
A to-do list to begin with
- Stabilising the insurance sector post recent reforms
- Reduce mis-selling in the sector
- Increasing penetration, which remains abysmally low
- Launch of Bima Sugam, an Amazon-like marketplace to sell, buy, and service insurance
- Unfinished tasks from previous regime, which include risk-based capital framework, risk-based supervision framework and International Financial Reporting Standards (IFRS)
