BackIRDAI suggests easing of capital requirement of ₹100 cr to enable entry of smaller insurers
With easing the entry capital requirement, the insurance regulator believes would allow the entry of small, specialised, and niche players that could support in boosting insurance penetration and density.
PremiumFinance Ministry-backed Insurance Regulatory and Development Authority of India (IRDAI) has suggested relaxation of the minimum capital requirement of ₹100 crore for insurers and instead indicated the government to fix the amount based on the business plans of the prospective company. With easing the entry capital requirement, the insurance regulator believes would allow the entry of small, specialised, and niche players that could support in boosting insurance penetration and density.
In an interview, IRDAI Chairman Debasish Panda told PTI, "Like in the banking system, we have microfinance institutions, regional banks, and small finance banks. So, we have all categories of banks then there are non-banking financial companies. In the insurance sector also, we should have different size players to come into the market so that they can operate in smaller geographies."
The chairman pointed out that the entry of smaller and specialised players would enable in increasing insurance penetration and density in the country. Also, he believes that the easing of capital requirements may also help in creating a specialised or a mono line for segments like motor and properties.
Further, in the interview, the IRDAI chief said that "in this context we are suggesting to the government to kindly look at the existing provisions and see whether you could remove the ₹100 crore cap minimum requirement. The regulator can frame the regulations based on the size of the company that they (promoters) are going to set up. For the micro insurance company it may be X amount, regional companies operating in a bigger larger geography could be Y amount"
He also revealed that the regulator is working on Bima Sugam which is seen as a game changer in the insurance industry. He told the news agency that Bima Sugam will be a one-stop shop for buying and selling insurance, for policy servicing, and also for claim settlement. Insurance companies can onboard the platform. It's going to be plug-and-play with an API (Application programming interface) interface.
Earlier, he had said that Bima Sugam should be a UPI moment for the insurance industry. Not just that, all the insurance intermediaries including individual agents, and web aggregators will have access to this portal. The tech-driven portal will help increase insurance penetration in the country by making it easy for customers all over the country to get insurances.
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