Irdai has taken a few bold steps; it has to sprint now

THE THREE-YEAR STINT

- NARAYANAN V

The three-year stint of Insurance Regulatory and Development Authority of India (Irdai) chief Debasish Panda saw a healthy tilt towards consumer protection.

Panda's tenure is scheduled to end on Thursday.

His big moves — capping premium hikes for senior citizen health policies at 10%, increasing surrender value for holders unhappy with their policies and reducing the eligibility criterion from two years to one — have forced the industry to review business models. Following the rollout of these decisions, life insurers have cut first-year commissions on new policies and clawed back to overall commission payouts. The fallout has been an overall degrowth for the industry in terms of premium collections.

These moves come against the backdrop of India's historically low insurance penetration — 2.8% in life and 1% in non-life as of 2023. With the industry already grappling with the Budget's push towards the new tax regime that will not give any benefits to taxpayers for buying insurance, Panda's moves have forced the industry to re-strategise to attract potential customers and devise business models.

Of course, there was a pushback from both general and life insurance companies. While the former complained about rising healthcare inflation and claims, the latter wasn't happy with the pressure on them to pay higher amounts. But Panda stuck to his guns.