Sector watchdog IRDAI chief Debasish Panda said on Friday that the insurance industry would require capital infusion of ₹50,000 crore per year to double its reach in the next five years.
Urging business groups to channelize funds into this sector, Mr Panda said the return on equity is 14% for life insurers and 16% for non-life, while it goes up to 20% in case of top five companies. Is. as well.
It may be noted that the insurance sector is a very competitive industry, with about two dozen life insurance companies and more than 30 non-life insurance companies. The overall penetration for insurance by FY21-end is 4.2%.
Addressing the annual Insurance and Pension Summit here organized by industry lobby CII, Mr Panda said, “If we have to double the penetration, an additional ₹50,000 crore needs to be infused every year.”
He said the number was arrived at after analyzing current GDP growth, inflation and penetration, and added that he would be meeting insurers’ heads after March to chalk out the same requirements.
“I want to reach out to companies that are present in this country, individual investors who are interested in investing their money,” he said.
The goal is to double access in the next five years, said the head of the Insurance Regulatory and Development Authority of India, adding that it is possible to insure everyone by 2047, when the country will be celebrating the 100th anniversary of its independence.
Panda said India is currently the 10th largest market in the world and will be the 6th largest by 2032.
The industry is serving people with traditional or old products, but new needs for safety also need to be analysed, he said.
He asked the players to engage with the housing regulators and make property insurance mandatory or effect the property insurance requirement with the Union Housing Ministry.
Insurers will also have to go beyond the present distribution arrangement with scheduled commercial banks, and enter into bancassurance arrangements with non-bank lenders, co-operative banks and payment aggregators.
“We have to take a fresh look at the way insurance is delivered,” Mr Panda said, encouraging the industry to make the pie bigger rather than “running away” from competition.
Mr Panda also asked insurers to create grievance redressal cells with a separate set of officers.
Financial sector participants also need to work together synergistically to deepen penetration.
Speaking at the same event, Manoj Anand, whole-time member, Pension Fund Regulatory and Development Authority, said there was a need for insurers to develop annuity plans that protect an individual from inflation risk.
He said the PFRDA expects Rs 11,000 crore to flow into annuity plans issued by insurers over the next five years after the holder reaches the age of retirement.
At a time when the debate is raging on states adopting the old pension scheme, Shri Anand said that the new pension scheme has been very beneficial for the sector.
He said that the total assets under NPS stood at Rs 8.53 lakh crore as on December 31, 2022 and is expected to increase to Rs 9.25 lakh crore by the end of FY 2023.
Mr Anand said there is a need to cover gig workers also under occupational pension schemes.