Insurance sector is currently at unstable equilibrium: Irdai chief

Regulators set the agenda as insurance, pensions, digital currency, cyber risk, and crypto policy took centre stage on the penultimate day of the leading summit

- KRISHNA KANT

Three of India’s biggest financial regulators set the tone for discussions on the second day of the Business Standard BFSI Insight Summit 2025. The day kicked off with a fireside chat with Ajay Seth, chairman of the Insurance Regulatory and Development Authority of India (Irdai), who assured stakeholders that as a regulator he has an open mind.

“As a regulator, this being my first appearance, I would like to assure that I have an open mind. Based on data, analysis, and the perspectives I hear, I reach a conclusion. But nothing is done without extensive consultation, generating discussion, and building consensus,” said Seth. His comments would be reassuring for an industry battling muted growth in new policies and premium income.

“The insurance sector, and especially the health insurance sector, is at an unstable equilibrium at the moment. On the life side, there is a low-efficiency equilibrium happening. But other sectors that manage the savings pools of Indians are giving tough competition to life insurance companies,” he said.

On the question of more capital for the insurance industry, he said that allowing 100 per cent FDI alone cannot meet the sector’s capital needs.

“The own capital of the insurance industry is about ₹3.5 trillion, both life and non-life put together. Out of this, FDI is only ₹80,000-90,000 crore.”

The government's plan to allow foreign direct investment (FDI) of up to 100 per cent in the insurance sector could also pave the way for global pension fund managers to enter the market without joint venture partners, as the FDI norms under insurance and pension laws are "joined at the hip", Pension Fund Regulatory and Development (PFRDA) Chairperson S Ramann indicated in a fireside chat. Currently, FDI is permitted up to 74 per cent in the pension fund management space.