Insurance Schemes, General Public & Covid-19 Pandemic

THE GOVERNMENT has undertaken deep structural and sustained reforms over the last few years. Among the sectors it has focused on are the health and insurance sectors. The Union government introduced the flagship Ayushman Bharat (PM-JAY) scheme, among its most ambitious schemes, to increase awareness and bring more citizens under insurance coverage.

- S. Ravi

The Covid-19 pandemic has also created growth opportunities for the sector. The insurance sector categorised into life, general and health insurance, comprises 54 insurance companies of which 24 are life insurers. The life insurance policies have increased and approximately 28 million new policyholders were acquired by the insurance companies in the FY 2020-21.

A notable reform, ‘the FDI cap’ for the insurance sector, has increased from 49 per cent to 74 per cent. The increase in the limit was primarily focused on attracting foreign investors to this sector, as it is highly capital intensive and has a long gestation period. Insurance companies take seven to ten years to break even and start becoming profitable.

This reform will enable insurance companies to raise funds to ensure maintaining their solvency in line with their growing business needs and also augment foreign inflows and help attract more foreign companies. In order to bring in more clarity on the Indian owned and controlled aspect, announced vide the October 2015 guideline, the Insurance Regulatory and Development Authority of India (IRDAI) vide circular dated 30 July 2021, omitted the said concept, which was a grey area and open to varied interpretation and disputes.