A dozen insurance permits up for grabs
- Insurance regulator reviewing 20 applications for licences
- As insurance penetration rises, Irdai expects the domestic insurance market to reach $200 billion by 2027
New Delhi: The insurance regulator plans to issue about a dozen licences this year, building on last year’s momentum when three companies got insurance licences in life and non-life segments after more than a decade.
Nearly 20 applications are awaiting approval with the Insurance Regulatory and Development Authority of India (Irdai), which has now set up a dedicated facilitation cell to support the registration application of companies and is providing on-tap no-objection certificates to fast-track approvals, an official familiar with the development said.
About a dozen of these applicants may get a final nod to start insurance operations this year, the official said, requesting anonymity.
In an emailed response, Irdai chairman Debasish Panda said that the business environment is favourable and conducive, and investors are attracted to the insurance sector, a sentiment underscored by the interest in new licences.
“Few more applicants are in the pipeline at various stages of fulfilling the criteria for registration. These applicants are supported by dedicated facilitation cells of Irdai,” Panda said, without giving out the names of entities seeking insurance licences from the regulator.
Earlier this year, the regulator approved the applications of two life insurance companies—Acko Life Insurance Ltd and Credit Access Life and Insurance Ltd— and a general insurer— Kshema General Insurance Ltd. For life insurance companies, these were the first approvals since 2011, while for general insurers, the last approval was in 2017.
With the addition of new companies, there are now 25 life insurers and 34 general players operating in the country.
“To attain the goal of ‘insurance for all’ by 2047, existing insurers need to scale up, new players must enter the sector, more distribution partners are required, more products are needed, and most importantly, usage of high-end technological solutions is a must,” the regulator said, highlighting the need to expand the insurance sector in the country by bringing in new players.
“We need to tap the huge potential that exists in almost every line of business, be it life, health, personal accident, motor, property, etc. We also need to be prepared for new & emerging risks and innovative solutions required for the same,” Panda said.
The Indian insurance market is the 10th largest globally, with the insurance industry registering a 13% growth during FY23. FDI in the insurance sector is about ₹57,000 crore, with assets under management (AUM) growing by 11% in FY23 to reach ₹60 trillion.
As insurance penetration rises, the regulator expects the domestic insurance market to reach $200 billion by 2027. It has steadily increased from 2.7% in 2000 to 4.2% in 2020 and was 3.2% in 2021, according to the Economic Survey 2022-23 released in January.
Rapid growth, coupled with its relatively low penetration, is attracting new investors. The post-pandemic period has accelerated market growth, with improved awareness about life and health insurance driving sales. The economic recovery and improved mobility have also boosted the demand for motor insurance.
According to an Icra report, the general insurance industry’s GDPI (gross direct premium income) grew 17.2% from a year earlier in FY23 to ₹2.4 trillion, buoyed by the resurgence of economic activities after the waning of covid-19 infections. A CareEdge report has also presented a positive picture of India’s life insurance market, with new business premiums or first-year premiums of companies growing by 17.9% in FY23 as against 12.9% growth in the previous year.
The move towards lighter regulations, expedited processing and flexibility in raising capital has contributed to more companies vying to participate in the Indian insurance sector. Proposals to amend insurance laws to allow rationalized capital requirements, composite registration, one-time registration for intermediaries, value-added services by insurers, and the sale of other financial products, are currently under way to boost participation.
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First Published:19 May 2023, 12:11 AM IST
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