Indian insurance sector has remained on rails even in the toughest of the times, thanks to the Insurance Regulatory and Development Authority (IRDA)'s tough and conservative apparatus. A sound insurance segment ensures better economic development as indicated by a study which states that 1 per cent increase in insurance penetration leads to 13 per cent reduction in uninsured losses and 22 per cent reduction in taxpayers' contribution to recovery following a natural catastrophe.
Keeping pace with international happenings, Indian insurance industry has remained in a good health and maintained absolute transparency and highest standards of corporate governance. Assets under management (AUM) of the Indian insurers are slated to touch Rs 20 trillion (US$ 376.51 billion) while the general insurance sector is anticipated to grow 18 per cent in 2012-13, said J Hari Narayan, Chairman, IRDA. He further reported that the insurance sector has grown substantially over the last few years, with its AUM from Rs 8 trillion (US$ 150.57 billion) in 2008 to Rs 18 trillion (US$ 338.82 billion) in 2011-12.
Government Initiatives
IRDA has recently formed four working groups to standardise products offered by life insurance companies, wherein the groups would consider unit-liked investment plans, linked variable insurance plans, non-linked variable insurance plans and other non-linked plans. Each group, with six members from life insurance companies along with an IRDA representative, would focus on bringing uniformity in the designs of the products, determining relevant parameters for each product and ensuring that these parameters are aligned with IRDA stipulations. They would also mention the numerical range within which the parameters could be allowed.
Alongside, IRDA has released an exposure draft to regulate opening of new centres by insurance companies according to which, insurers who have completed 10 years of business have to ensure that at least 25 per cent of the proposed new places of business should be in places with population of 1,00,000 or below. The initiative would help to enhance insurance penetration in the country. The regulator further added that insurers may approach IRDA for any urgent proposals regarding opening of new branches in rural/ semi urban areas, anytime during the year in addition to the proposals submitted under the annual Business Expansion Programme. Such proposals would then be considered on merit.
Road Ahead
A World Bank study named 'Government-Sponsored Health Insurance in India: Are You Covered?' has stated that India would have more than 630 million people covered under health insurance by 2015. Over last five years, the government-sponsored programs and schemes have significantly expanded the population covered by health insurance in India and the newly launched schemes are introducing explicit entitlements, improving accountability and leveraging private capacity, particularly with an aim of reaching the poor.
The study anticipates that by 2015, almost half of the country's population can be covered with some form of health insurance wherein spending through health insurance is likely to reach 8.4 per cent of total health spending, higher from 6.4 percent in 2009-10.
Exchange Rate Used: INR 1 = US$ 0.01881 as on February 6, 2013
References: Media Reports, Press Releases.