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A report compiled by former members of the Insurance Regulatory and Development Authority of India (IRDAI) has called for an overhaul, or alternatively for the industry to boost performance.
The report, prepared jointly by former IRDAI member H Ansari and insurance expert Arun Agarwal, said that compliance costs are high as regulatory policy is less development orientated, The Economic Times reports.
“The regulatory framework and support system tends to over-regulate,” the report states. “Predictably the cost of compliance is high and regulatory policy is less development oriented.”
The report has been submitted to IRDAI and the Government and identified areas that need reform from stakeholders such as insurers, IRDAI, and judiciary to help the nation develop a modern, progressive insurance industry.
Regulations in India are prescriptive and rules-based, the report notes, with anchors on products, pricing, placement and promotion unable to meet modern, global standards.
The report also notes that the digitalisation plans of many in the industry appear far-fetched as they challenge existing data silos between different insurance sectors as different regulators follow different priorities.
“We have found IRDAI regulations quite contemporary and have been focusing a little heavily on policyholder protection,” Sanath Kumar, chairman and MD of National Insurance Company said of the findings.
“Their digital initiatives have been dealing with cutting edge technology and insurers have found it beneficial to adhere to. The descriptive regulations are a general trend in the country with Sebi, RBI and Trai adopting it.”
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