Mumbai, : The Insurance Regulatory and Development Authority of India (IRDAI) is working on guidelines for regulatory sandbox for certain innovative products that can be tried out in a limited scale and can be rolled out thereafter as full-fledged products, its chairman, Mr S.C. Khuntia said at an ASSOCHAM event held in Mumbai today.
“There are some new types of products which have not been tested out, suppose some companies want to experiment with innovative products then we can allow them through a regulatory sandbox method where in a limited scale, either for a limited geography or a limited number of policyholders it will be tried out, so we will allow them,” said Mr Khuntia while inaugurating an ASSOCHAM Insurance Summit.
The IRDAI chief further informed that insurance regulator will also bring into place new methodology for quick product approval. “We are also looking at opportunities to have more use and file kind of products so there I need co-operation from all of you.”
On the LIC-IDBI Bank deal, he said that insurance regulator had the powers to give relaxation in specific cases. “The LIC has requested that in the interest of their expansion, they would like to have a synergy with a bank, some relaxation has been given for this specific case.”
Sharing his views on further developing the micro-insurance sector, Mr Khuntia said, “It is another area where we need to concentrate so that we go to remote, rural areas as this is something where our progress has been very-very unsatisfactory and insurance industry must look into this aspect.”
Expressing concern over lower penetration of insurance in the country which is only 3.69 per cent of the gross domestic product (GDP) as against global average of 6.2 per cent, he urged the industry to further spread awareness among the general public about the importance of insurance, especially among youth.
Highlighting the low persistency factor in India’s life insurance sector, he said it needs to be improved to gain more trust from policyholders. “If we improve this persistency, we will have much more money available and that will go to long-term savings which will result in much higher economic development in the country because long-term projects need a type of funding that can be supplied only by the insurance industry because we can invest it for a much longer period of time.”
He suggested that insurance sector can tap modern technologies like artificial intelligence, blockchain, machine learning and others for improving coverage, generating awareness, having innovative product designs and catering to the needs of consumers.
Sharing the industry perspective at the ASSOCHAM conference, Mr V.K. Sharma, chairman of the Life Insurance Corporation of India (LIC) said that climate change, aging population and rising healthcare costs are certain key challenges being faced by the insurance industry in the country.
He said, considering that insurance is about managing long term liabilities with long term assets therefore there is a need to have longer term bonds beyond 10-15 years.
In his welcome address, ASSOCHAM’s secretary general, Mr Uday Kumar Varma said that for insurance industry, the outlook for coming years seems extremely encouraging and bright. “It is a sector which is poised for an extremely good rate of growth because of a burgeoning middle class, preponderance of youth in our demographic profile, greater education and awareness, and greater life expectancy.”
He also lauded the major decision taken by the government of increasing FDI limit from 26 per cent to 49 per cent and schemes that government launched like the Pradhan Mantri Fasal Bima Yojana (PMFBY) that have done extremely well and have helped the sector a lot.
Amid others who addressed the ASSOCHAM conference included – Ms R.M. Vishakha, MD & CEO, India First Life Insurance Company Limited; Mr Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services and Mr G. Srinivasan, chairman, ASSOCHAM National Council on Insurance.