Firms can appoint agents without insurance regulator’s licence
Irda may also make health insurance a separate category
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Hyderabad: Insurers can now appoint agents who no longer have to obtain a permit from the Insurance Regulatory and Development Authority of India (Irda), the regulator said on Thursday, a move that is expected to help the firms to contain high attrition.
“Now the appointment of agents is given to the insurance companies. So the whole licensing system will go,” T.S. Vijayan, chairman of Irda, told reporters on the sidelines of an event.
Under the existing system, individual agents had to undergo training and clear an exam to get a licence from Irda to sell insurance policies to the public and provide after-sales service, including assisting at the time of a claim.
Vijayan said the new system pertaining to the appointment of insurance agents will come into effect from 1 April.
Irda may also make health insurance a separate category.
“Currently, there are two lines of business—life and non-life. Health comes under non-life,” Vijayan said. “We would like to frame a separate regulation for health insurance.”
He earlier released a report on the insurance industry titled India Insurance Vision 2015 that was prepared by lobby group Confederation of Indian Industry (CII).
The report predicts the Indian insurance sector to be worth $250 billion by 2025.
On 31 March last year, the industry was pegged at $59 billion, of which life insurance was $46 billion and $13 billion was general insurance that includes health.
The domestic insurance industry is the 16th largest market and is expected to be one of the top 10 by 2025.
“The last few years have been challenging for the industry with declining growth in life insurance premiums and significant challenges in non-life profitability. This was driven by a combination of macroeconomic factors and structural challenges inherent in the insurance industry,” the report said.
“However, an improving economy with potential regulatory reforms and concerted action by industry players can usher in an era of significant growth as well as value creation,” the report added.
It suggested steps that are expected to help the life cover segment to grow at 12% per annum over the next decade to reach $160-175 billion and non-life to grow at 22% to reach a gross written premium of $80 billion.
“The insurance industry has the potential to grow three to five times in size over the next decade. For this to happen, policy action by the regulator, collaboration between the players, the individual player’s push to develop distribution, and technical capabilities would be critical,” said Analjit Singh, chairman of CII’s national committee on insurance and pensions.
“The last few years have been challenging for the insurance industry with declining growth in life insurance and profitability challenges in non-life. However, an improving economy and a stable reformative government action plan can help drive significant growth and value-creation over the next few years,” said Sanjiv Bajaj, co-chair of CII’s national committee on insurance and pensions and managing director of Bajaj Finserv Ltd.
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