Insurance Sector Needs To Grow At 3-4 Times Of India's GDP: BC Patnaik, IRDAI
India's insurance sector will have to grow at three to four times the country's gross domestic product (GDP) growth with the help of technology-led innovative products and cost-effective distribution models across the nation, said BC Patnaik, Member (Life), IRDAI.
Patnaik added that many companies are 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 five to ten years all these markets will be saturated as companies have become aggressive.
India has the potential of getting a 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, India witness 200 per cent growth and maintain it then perhaps we can bridge the gap, he stated.
"If not 200 per cent if 40-50 per cent then over 10 years the gap will be bridged. Health insurance per capita spent in India is USD 5 while in China it is USD 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 breakneck pace."
Sharing perspective on the insurance industry, Tablesh Pandey - Managing Director, Life Insurance Corporation of India, said that the Indian economy is showing resilience in the 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 insurance penetration by including women and innovative products for rural folk," Pandey mentioned.
Pandey stated that the Indian economy is poised to become the world's third-largest economy by 2030 and this is positive news for insurers because higher economic growth is the main driver of any insurance industry development.
Talking about 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, the Internet of things, quantum computing, blockchain, video calling etc not only for offering digitised marketing and distribution channels but also improving the existing processes and services.
Anuj Mathur, Chairman, Assocham and MD and CEO, Canara HSBC Life Insurance Company, 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."
Mathur mentioned that the industry has to come out of that phase where an insurance contract can be maybe two pages or three pages maximum rather than running into 30 to 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," Mathur stated.
