The three-year stint of Insurance Regulatory and Development Authority of India (Irdai) chief Debasish Panda saw a healthy tilt towards consumer protection. Panda’s tenure is scheduled to end on Thursday.
His big moves — capping premium hikes for senior citizen health policies at 10%, increasing surrender value for holders unhappy with their policies and reducing the eligibility criterion from two years to one — have forced the industry to review business models. Following the rollout of these decisions, life insurers have cut first-year commissions on new policies and clawed back to overall commission payouts. The fallout has been an overall de-growth for the industry in terms of premium collections.
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These moves come against the backdrop of India’s historically low insurance penetration — 2.8% in life and 1% in non-life as of 2023. With the industry already grappling with the Budget’s push towards the new tax regime that will not give any benefits to taxpayers for buying insurance, Panda’s moves have forced the industry to re-strategise to attract potential customers and devising business models.
Of course, there was a pushback from both general and life insurance companies. While the former complained about rising healthcare inflation and claims, the latter wasn’t happy with the pressure on them to pay higher amounts. But Panda stuck to his guns.
Industry experts say that the pressure to make higher payouts will significantly reduce mis-selling as there will be little incentive in terms of commissions.
Panda also targeted the ills in the banking system that have often led to mis-selling of products. A few months ago, speaking at the State Bank of India’s Annual Business & Economic Conclave, Panda said, “…the bank channel is a very useful channel, but of late, a lot of ills have crept into the system”.
He went on to add that banks should become a distribution model which is low cost. “You don’t need to chase customers. You have to give the option to the customers. No mis-selling, no force-selling…”
While the sector is still adjusting to these sweeping policy changes, the road ahead is also challenging.
One of the most pressing priorities will be the rollout of “Bima Trinity”, Panda’s pet initiative that faced multiple delays and remained unfinished during his tenure.
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