Background of Insurance Sector Reforms in India
Insurance Companies: The Insurance sector in India consists of total 57 Insurance companies.
- Out of which, 24 companies are the life insurance providers and the remaining 33 are non-life insurers.
- Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
- There are six public sector insurers in the non-life insurance segment.
- In addition to these, there is a sole national re-insurer, namely General Insurance Corporation of India (GIC Re).
Market value: India’s Insurance market stands at $131 Bn as of FY22.
Market share: In terms of market share, the share of life insurance in total premium in India is 75.24% and the share of non-life premium is 24.76%
Insurance Penetration: India’s insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life insurance penetration at 1%
Growth rate: The Indian insurance industry grew at a CAGR of 17% over the last two decades and is expected to continue its commendable growth trajectory in the future years.
FDI Limit: Foreign Direct Investment (FDI) in the industry under the automatic method is allowed up to 26%.
Regulator: The insurance industry in India is monitored by the insurance regulator the Insurance Regulatory and Development Authority of India (IRDAI).
Global Comparison: India is ranked 11th in global insurance business. India’s share in global insurance market was 1.72% during 2020.
- India is ranked 10th in life insurance and 14th in non-life insurance in the world.
What are the IRDAI’s 11-point Reforms
Objectives of the Reforms
Insurance Sector Reforms in India achieve ‘Insurance for All’ by 2047
To strengthen the three pillars of the entire insurance ecosystem viz. insurance customers (policyholders), insurance providers (insurers) and insurance distributers (intermediaries).
Key Highlights of Insurance Sector Reforms
Ease of doing business: Regulations pertaining to registration of Indian insurance companies are eased to promote ease of doing business.
Wider range for customers: Tie-up limits for intermediaries have been increased to enable the policyholders to have wider choice and access to insurance.
Amendments in the Regulatory sandbox: To promote innovation and technological solutions in the industry.
Raising capital: Amendments have been introduced to facilitate ease of raising capital for insurance companies and the limits are enhanced.
Actuaries: They play a pivotal role in the operations of an insurer. To ensure sufficient supply of Actuary professionals in the industry, the experience and qualification requirements have been made flexible.
Solvency norms for general insurers: To increase insurance penetration in Crop Insurance, solvency norms for general insurers have been eased.
Solvency Norms for Life Insurers: In order to enable efficient utilization of capital, solvency norms have been revised.
Listing of Insurance Companies: Listing of insurers in the stock exchanges allows the insurers to raise capital. It will also enhance the transparency, efficiencies and accountability of insurers.