Mumbai, Apr 7 (PTI) Insurance Regulatory and Development Authority of India (Irdai) is likely to urge the government to remove the Rs 100 crore entry cap for setting up an insurance company in the country, its Chairman Debasish Panda said on Thursday.
The lower entry barrier will facilitate the entry of more niche players in the space, he added.
“As per statute, there is an entry cap where you have to invest Rs 100 crore to start an insurance business in India. After recent deliberations, we are of the firm view that now we should allow multiple players and differentiated kinds of players such as standalone micro insurers, niche players, and regional players to enter into the insurance space. This Rs 100 crore may be a barrier rather than a facilitator.
“So, we propose to request the government to amend the Act and remove this so-called minimum requirement and leave it to the regulator to decide what will be the entry-level requirement,” Panda told reporters.
He said the idea behind removing the entry cap is to open the sector’s door for small micro players, which will help in increasing the insurance penetration level.
Panda and other senior Irdai members met various stakeholders of the insurance industry in Mumbai.
He said the insurance regulator is revisiting the current investment norms and will very quickly rationalise them.
This will help in bringing in more investment into the insurance sector and also make it easier for the existing players to get in more funds.
“That is on the cards and soon we will be notifying them,” he said.
The regulator has set up three-four working groups. These groups will relook at various areas, including Irdai regulations, amendments required to the Act and distribution channels.
“We would also ask the group to look at whether we can have standard products with defined benefits, paramedic covers, particularly for lower-income groups, small traders, shopkeepers, micro-entrepreneurs, farmers etc,” he said.
One of the working groups will also look into technology and data management, the chairman noted.
Panda further said the regulator will move from the current ruled-based regulations to the principle-based regulations.
Irdai will have light regulations and have more tech-based supervisions, he said.
The regulator will explore the launch of Bima Mitra on the lines of Bank Mitra to enlarge the scope of distribution to take insurance to every doorstep.
Irdai will focus on reducing the compliance burden on regulated entities by rationalising the regulatory framework, Panda said.
The regulator will facilitate lowering of operating costs and review the commission/ remuneration structure of insurance products to reduce costs for policyholders, he said. PTI HV BAL BAL
