India (Commonwealth Union)_ According to reports, the Insurance Regulatory and Development Authority of India (IRDAI) has requested the government to reduce the minimum capital requirement of INR 1 billion. According to the regulator, eliminating the present entry capital requirement will allow smaller and more specialized insurers to enter the market, thereby increasing the country’s insurance penetration and density. In addition to expanding the sector’s reach in smaller regions, the move would enable the creation of specialized or monolines for segments such as automobiles and properties.
“Like in the banking system, we have microfinance institutions, regional banks, and small finance banks,” Debasish Panda, cha irman of IRDAI, said. “So, we have all categories of banks, and then there are non-banking financial companies. In the insurance sector too, we should have different size players come into the market.” In place of a minimum capital of INR 1 billion, IRDAI wishes to fix the amount required for entrance based on the size and business ambitions of a firm.
According to Panda, the regulator can structure the rules depending on the size of the firm the promoters intend to establish. It may be X amount for a micro-insurance firm and Y amount for regional enterprises operating in a bigger geographical area. Panda also disclosed the regulator’s intentions for the digital portal Bima Sugam, which is called a one-stop shop for various insurance services.
According to him, the portal would be plug and play with an application programming interface and will be accessible to all insurance intermediaries, including independent agents and web aggregators. IRDAI instructed its regulated insurers last month to join the Bima Sugam platform by January 2023. According to previous reports, the project requires around INR 850 million in funding, of which 30% is likely to come from life insurers and another 30% from general insurers.