The Insurance Regulatory and Development Authority of India (IRDAI) has suggested the government to ease the minimum capital requirement of Rs 100 crore and permit the regulator to fix the amount depending upon business plans of the prospective company.
Doing away with the minimum capital requirement of Rs 100 crore would allow entry of small, specialised and niche players, which would help in increased insurance penetration and density in the country.
"Like in the banking system, we have microfinance institutions, regional banks, and small finance banks. So, we have all categories of banks then there are non-banking financial companies. In the insurance sector also, we should have different size players to come into the market so that they can operate in smaller geographies," IRDAI Chairman Debasish Panda told PTI in an interview.
Entry of smaller and specialised players would help in increasing insurance penetration and density, he said.
"So, in this context we are suggesting to the government to kindly look at the existing provisions and see whether you could remove the Rs 100 crore cap minimum requirement. The regulator can frame the regulations based on the size of the company that they (promoters) are going to set up. For the micro insurance company it may be X amount, regional companies operating in a bigger larger geography could be Y amount," he said.
Going forward, he said, the relaxation in capital requirement would help in creating specialised or a mono line for segments like motor and properties.
"Why not create that kind of framework in our statute which allows not alone micro, small, regional companies etc but also those catering to niche products," he added.
Panda also said IRDAI is working on Bima Sugam, which will act as a game changer in the insurance sector by providing a one-stop platform for multiple services including sale of policy, renewal and settlement of claims.
This tech-led portal will help in expanding insurance penetration in the country by ensuring hassle-free experience to customers across the country. Bima Sugam should be a UPI moment for the insurance industry, he said.
Unified Payments Interface (UPI) has revolutionised digital payment in the country as common people have started using it for making even small payments. The success of UPI in a short span of time has caught global attention and many countries are trying to replicate it. Launched in 2016, payment through UPI has crossed a milestone of Rs 11 lakh crore in September this year.
"Bima Sugam will be a one-stop shop for buying and selling insurance, for policy servicing and also for claim settlement. Insurance companies can on board the platform. It's going to be plug and play with API (Application programming interface) interface," Panda said.
He further said all the insurance intermediaries, including individual agents and web aggregators, will have access to this portal.
