New Delhi: Finance minister P. Chidambaram on Friday called on the insurance regulator to play a more developmental role rather than just be a watchdog as India tries to improve its dismal insurance coverage.
Chidambaram was speaking at the launch of a nationwide insurance campaign, an initiative of the General Insurance Council, a representative body of general insurance companies.
While the penetration of life insurance in India is estimated at around 4.4% of gross domestic product (GDP), general insurance penetration is as low as 0.7% of GDP.
The finance minister expressed hope that with a new chairman at the helm of the Insurance Regulatory and Development Authority (Irda), who is also a career insurer, the industry will bridge this vast gap.
T.S. Vijayan, former chairman of Life Insurance Corp. of India, took over as Irda chairman on 21 February from J. Hari Narayan.
Vijayan said there was no conflict between a regulatory role and a development one. The “regulator is also looking at developing a strong sector,” he said.
The last few years have seen Irda facing flak from insurance companies for regulatory changes related to product structures and distribution, which saw the industry contracting.
Chidambaram pointed out that insurance helps mobilize household savings and can contribute to the growth of the economy, thanks to the enormous amount of funds at the industry’s disposal for investing.