The insurance sector has been able to grow at healthy 9.2% in 2020-21 with the growth of life insurance at 11.2%, says Subhash Chandra Khuntia, who recently retired as chairman of Insurance Regulatory and Development Authority of India (IRDAI).
In a letter on May to all the managing directors and CEOs of life, non-life and health insurers, Khuntia said the Indian insurance sector is currently on the cusp of a transformation. He outlined that there are three main factors at play.
“The first is demography of the country with a predominantly young population, which is likely to persist for several years; second, the potential of high economic growth that would improve affordability, and the third is relatively low level of insurance penetration that provides huge opportunity for growth,” Khuntia said. “Indian capability in IT and IT-enabled services sector will further accentuate the potential growth of Indian insurance sector.”
The former chairman believes all stakeholders need to work together to create awareness about the need for protection and for higher level of customer engagement throughout the insurance life cycle for enhanced customer satisfaction. Khuntia said emerging risks arising out of global climate change and cyber-risks will have to be addressed. “Use of new distribution channels and omni channels will be pervasive. Insurers need to be agile to respond to the fast-changing needs of the customers. Regulatory sandbox provides an opportunity to pilot such innovative products and services.”
He strongly advised insurers to concentrate on prevention of risk, and continuous engagement with policyholders, so that the latter derive benefit not only through claim settlement, but also from prevention of loss. “This will generate greater trust between the insurer and the policyholder, and both would stand to benefit in the long run.”
Khuntia pointed out that insurance inclusiveness is another area that needs focus so as to cater to rural population, farmers, women, MSME, the poor and the marginalized. “We need to develop cost-effective micro-insurance models for the same. This journey will be a win-win for all stakeholders, will generate additional employment, provide funds for investment in the economy, particularly in the infrastructure sector and provide necessary protection to the policyholders.”