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Informist, Friday, Jan. 17, 2025

 

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--IRDAI Sood: Tax sops, subsidies will aid insurance sector penetration 
--CONTEXT:IRDAI Whole-Time Member Deepak Sood at Mint BFSI Summit and Awards 
--IRDAI Sood: Insurance industry needs to rethink distribution models 
--IRDAI Sood: Must launch customised insurance plans, increase diverse plans 
--IRDAI Sood: Need to expand reinsurance capacity 
 

 

MUMBAI – India's insurance sector penetration continues to be lower than desirable and will benefit from tax incentives and targeted subsidies that will help expand coverage, Insurance Regulatory and Development Authority of India's Whole-Time Member Deepak Sood said Friday. Speaking at the Mint Annual BFSI Summit and Awards 2025, Sood emphasised that such measures could have a profound impact on people. "Tax benefits, subsidies where it counts – all these things will benefit the insurance sector and the population quite substantially. It will go a far way in increasing awareness, in increasing penetration, in increasing coverage at an individual level," he said. 

 

Sood said these measures would not only raise awareness about the importance of insurance but also make it more affordable and attainable for a larger population and will contribute to increased coverage, especially in underserved segments, driving the goal of "insurance for all by 2047".

 

Sood highlighted that India's current insurance penetration stands at only 4% of GDP, well below the global average of 6.8%. He also pointed out that while the number of people with insurance is slowly growing, the gap between current coverage and global standards is still considerable. "If you look at the insurance gap, the gap for each individual, for each little enterprise, it's far more... But within these challenges are the opportunities and the road to universal coverage is something that we have to evolve," Sood said.  

 

While government initiatives like Ayushman Bharat have been instrumental in expanding health insurance coverage to millions, Sood acknowledged that gaps remain, particularly in rural areas and among middle-income earners. To bridge this gap, IRDAI has introduced reforms to make insurance more accessible, including regulatory adjustments to facilitate the approval of innovative insurance products and encourage more players in the market.

 

A key challenge identified by Sood is the "missing middle" – the group of people who do not fit into the low-income segment covered by government schemes but also cannot afford private insurance. To address this, Sood called for customised insurance products and innovative distribution models to ensure this group is not left behind.

 

Sood also spoke on the importance of expanding India's reinsurance capacity to deal with emerging global risks. He highlighted concerns over climate change and cyber threats, both of which are growing in scale and complexity. "We need to expand reinsurance capacity in this market so that we are able to handle more and more and be self-reliant rather than go elsewhere," he said. He called for increasing domestic reinsurance capabilities, supported by the introduction of new market players, to safeguard against increasingly complex global risks.

 

Elaborating on the role of the regulator, Sood said IRDAI has been actively working on reforms to enhance product availability and efficiency. He cited the example of the "use and file" system, which allows insurers to bring new products to market quickly and with reduced delays. Additionally, the regulator has mandated clearer customer information sheets, aimed at helping policyholders better understand what they are purchasing, he said.

 

Sood reiterated that achieving the vision of 'Insurance For All By 2047' will require the collective effort of all stakeholders—the government, the regulator, and the insurance industry. By addressing existing gaps, promoting innovation, and leveraging new technologies, India can work towards building a resilient, inclusive insurance ecosystem for its future, he said.  End

 

Reported by Sachi Pandey

Edited by Tanima Banerjee

 

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