IRDA batting for capital infusion in insurance sector, not FDI: T S Vijayan
26 September 2014
The Insurance Regulatory Development Authority (IRDA) is not advocating an increase in foreign direct investment in insurance sector,per se, but the industry needs capital infusion for its survival and growth, chairman TS Vijayan said, adding that IRDA welcomed the Insurance Amendment Bill as FDI meant more capital.
Vijayan said while the regulator had made suggestions to a standing committee, especially with respect to areas like e-commerce and health insurance, it is wrong to assume that IRDA was welcoming a hike in foreign direct investment in the insurance sector as proposed in the bill.
Speaking on the sidelines of an Assocham conference on 'Digitisation and Enhanced FDI in Insurance - The road ahead' in Hyderabad today, the IRDA chief said he said the Insurance Amendment Bill that was before Parliament now was drafted in the year 2006. Since then, it had evolved much and changes had taken place.
''That is not the thing. What we have been consistently maintaining is that the industry needs a huge amount of capital and that if foreign capital is increased, it would be easier flow of capital than all put by Indians. We are not saying FDI has to come. Capital is required and Indians may not have that much ability to put all the capital. If more comes, it will help,'' he said.
Earlier, addressing business heads of of the industry, he said that instead of constantly talking about the need for insurance penetration to increase, they could work on coming up with a product that could appeal to the masses.
''We need to develop sales professionals. Can you come up with a product that 60 per cent of people will be able to afford?'' he asked.
The insurance sector was always in the forefront of leveraging technology, he recalled that apart from the defence sector, it was the Life Insurance Corporation of India that was the first to get the latest IBM 1410 data processing systems way back in India. He asked the audience whether any insurance company had developed an app (application) to help customers compare products.
''Use the power of technology to give the power to access policy details to the customer and your problems will be solved. The industry's strength lies in it simplifying products and processes and that is the way forward,'' he said.
The insurance industry should introduce products that are suitable to be sold online, said Vijayan. However, he added, only one per cent of total insurance sales was currently happening in the digital mode due to the complexity of products and Know Your Customer norms, among others.