Press Release

Insurance sector needs to grow at 3-4 times of country's GDP: Shri B C Patnaik, Member (Life), IRDAI

The Indian economy is poised to become the world's third largest economy by 2030 and this is positive news for insurers considering the fact that higher economic growth is the main driver of any insurance industry development.

Mumbai, 14 November 2023: “India's insurance sector will have to grow at 3-4 times the country's GDP growth with the help of technology-led innovative products and cost-effective distribution models across the country. Many companies are now flooding rural areas as they see value in these markets. They say they will have a cost-effective distribution model and saturate the market. Within 5-10 years all these markets will be saturated as companies have become aggressive," said B C Patnaik, Member (Life), IRDAI.

“India has the potential of getting Rs 15 lakh crore premium from the existing model, for which the growth required from current levels is around 200 per cent. If in a single year we do 200 per cent growth and maintain it then perhaps we can bridge the gap. If not 200 per cent if 40-50 per cent then over a period of 10 years the gap will be bridged. Health insurance per capita spend in India is $5 while in China it is $66 so that is the level of consciousness for health insurance apart from affordability. Out of pocket health expenditure is the major reason for pushing people into poverty. World health insurance penetration as a percentage of GDP is 2 per cent but India is only 0.4 per cent," added Patnaik.

To accomplish the vision of Insurance for All, Patnaik said, "We are thinking of adding more metrics based on percentage of population, societies, occupations, villages, muhallas, number of senior citizens covered, number of business owners covered, number of homes covered. We are working at a very fast pace."

Sharing perspective on the insurance industry, Tablesh Pandey - Managing Director, Life Insurance Corporation of India, said, "The Indian economy is showing resilience in face of global uncertainties. However, in terms of the Indian insurance industry, the importance of insurance has been gaining traction. The Indian insurance industry is hailing IRDAI’s commitment to enable insurance for all by 2047, this is expected to aid the entire insurance ecosystem to grow rapidly by bolstering the ease of doing business. It will ultimately improve the penetration of insurance with inclusion of women and innovative products for rural folk. The Indian economy is poised to become the world's third largest economy by 2030 and this is positive news for insurers considering the fact that higher economic growth is the main driver of any insurance industry development.

Talking on the digital transformation and risk management controls, he said apart from using the conventional agent-centric method as the primary way of meeting customers the industry has developed into digital technologies through the use of artificial intelligence, Internet of things, quantum computing, block chain, video calling etc not only for offering digitized marketing and distribution channels but also improving the existing processes and services. With the advent of technology in every area of business the need of greater risk management controls to avoid cyber frauds and tougher cyber security policies are the need of the hour. The passing of the data privacy regulation has highlighted the importance of data privacy and data usage wherein the consumer’s rights have to be upheld at all times. The rising customer expectations requires the insurers to work towards shorter processing time, doorstep delivery, niche and customized products to ensure more and more customer engagement.

Anuj Mathur, Chairman, ASSOCHAM, and MD & CEO, Canara HSBC Life Insurance Company Ltd, said, "To be honest, I think if you look at the insurance product as of now, generally I am talking of products, I think it's a very complex kind of a product. I think there is an urgent need for simplification and thanks to the regulator, I think from their side, they have kind of given flexibility to the industry. But still I think we have to, as an industry, we have to come out of that phase where an insurance contract can be maybe 2 pages or 3 pages maximum rather than running into 30-35 pages of complex legal terms and conditions which hardly anyone reads and then we see that customers later on realize that what they've got is different. So I think it is very, very important for us to simplify the entire ecosystem around insurance products. I think BIMA Sugam, BIMA Vistar, BIMA Wahak, these are brilliant initiatives."

G Srinivasan, Advisor, Assocham National Council for Insurance concluded the session with Vote of Thanks.