Latest news with #InsuranceAmendmentBill
Mint
02-07-2025
- Business
- Mint
Irdai has no plan to manage insurance distribution channels despite mis-selling
Mumbai: Even as mis-selling of insurance plans by banks has drawn scrutiny, the sector regulator doesn't want to manage distribution channels and seeks to focus on customer awareness to check the malpractice. 'It's not necessary that every mis-selling is mis-selling, it's also about the customers' understanding of the product,' said Swaminathan S Iyer, member (life), Insurance Regulatory and Development Authority of India on the sidelines of an event on Wednesday. 'Once you drive home that your understanding is different from what the product I think the absolute number on mis-selling will definitely reduce.' The regulator has facilitated an open architecture for banks and insurance companies, and it is now up to the individual entities to decide how they sell products, Iyer said, adding that more clarity on the matter will be available once the Insurance Amendment Bill is passed. On whether the regulators can mandate an open architecture for banks to sell products of multiple insurers instead of only the insurance company promoted by them, Iyer said it's a matter that the Reserve Bank of India (RBI) might have to take up. State Bank of India andICICI Bank only sell insurance of group companies, even though they are allowed to partner with nine insurers, including three each from the life, general, and health segments. 'Distribution cannot be mandated; we can facilitate it. We'll work towards it,' Iyer said, adding that as of now, Irdai's complete focus is on growing insurance reach and penetration. In November 2024, finance minister Nirmala Sitharaman and former Irdai chairman Debasish Panda had separately flagged rising instances of insurance mis-selling. The finance ministry has asked banks and non-banks to stop offering incentives on insurance sales to eliminate this malpractice, Mint reported on 3 June. The department of financial services issued specific instructions, asking lenders to immediately review their marketing practices, sell insurance products only as per customers' requirements, and not link sales targets to incentives. Last month, RBI deputy governor Rajeshwar Rao said that mis-selling without regard to suitability and appropriateness would beget distrust in schemes aimed at providing a safety net to low-income households. 'We are examining whether it necessitates framing of guidelines to address mis-selling of financial products and services by regulated entities,' he had said at a conference. Insurers, however, want to focus on deepening their distribution. Banks have almost 6-7 times more reach than all the branches of life insurance companies—a fact that is recognised by the government, HDFC Life managing director Vibha Padalkar told Mint in an interview last month. She also said that there is no conclusive data proving that mis-selling via the bancassurance channel is worse than overall mis-selling across the industry. 'Our focus should be on strengthening processes, not on curtailing bancassurance. We need more distribution touch points, not fewer,' she said. On whether Irdai is considering a road map for listing of insurance companies, like RBI has for banks, Iyer said the regulator has issued an advisory for listing but does not plan to mandate it. According to Iyer, listing has three large objectives: transparency, governance, and capital. While capital has not been an issue for insurers, transparency is being driven through disclosures, which the regulator has already been mandating a lot more of, he said. Instead, Irdai would prefer to look at insurance listing on a case-to-case basis. 'As a regulator, we will only look at it from an insurer-to-insurer basis, and see what is the best fit for which company, and how do we drive that. Mandating will not be a good thought for now,' he said. Padalkar had told Mint that a listing road map for large insurers would be healthy from a governance point of view. 'In insurance, most of the companies are unlisted and there is minimal disclosure, which adds to the opacity of the sector. There are unlisted companies managing over ₹ 75,000 crore worth of public funds,' she said, adding that even if these companies don't list, it would be a good idea for them to start making disclosures like a listed company. 'This would bring about a lot more transparency and improve market conduct,' she had said. Iyer was speaking at the sidelines of an event by the Insurance Awareness Committee (IAC) to launch 'Sabse Pehle Life Insurance' awareness campaign. The IAC, part of the industry body Life Insurance Council, plans to spend ₹ 150-160 crore every year on this campaign, members said at the event. Life insurance is growing at a compounded annual growth rate (CAGR) of 9.5%, according to Irdai data. The total premium of life insurers stood at ₹ 8.29 trillion as at the end of FY24, up from ₹ 7.82 trillion in FY23. The total premium has grown at a CAGR of 10% over the last five years.
Time of India
24-06-2025
- Business
- Time of India
Irdai nudged on premiums, grievances: Finmin wants upgrade in claims settlements, corp governance
New Delhi: North Block has asked the insurance regulator to step up vigilance, claims settlements and grievance redressal , even as health-cover premiums climbed too quickly through last year to slow the pace of coverage in an under-penetrated market. This was conveyed during a meeting last week between senior finance ministry officials and representatives from the Insurance Regulatory and Development Authority of India ( Irdai ), said people familiar with the developments. 'The government explicitly expressed its concerns over the hike in insurance premiums, especially health insurance, complaints on claim settlement and corporate governance issues, especially in some stand-alone health insurance companies or SAHIs,' said an executive, requesting anonymity. Health insurance premiums have spiked nearly 15% in several cases this year, triggering many policy holders to opt out. India's overall insurance penetration declined to 4% in 2022-23 from 4.2% in 2021-22, according to the latest data. Live Events Life insurance penetration fell to 3% from 3.2%, while non-life insurance remained steady at 1%. 'The government wants some of these issues to be taken up on an urgent basis and even set some new protocols if required before the Insurance Amendment Bill gets passed,' he said. The finance ministry has promised all support and expects the Irdai's board to have a re-look at these broader issues. Besides allowing 100% foreign investment in the sector, the Insurance Amendment Bill also paves the way for a composite licence and allowing foreigners as key managerial personnel (KMP) in Indian insurance firms. The Irdai hasn't had a chairperson since March this year, and a section in the government is in favour of a seasoned bureaucrat who can take on these issues head-on, said an official, requesting anonymity. He said the government wants Irdai to closely look at board meeting outcomes of the companies and that all regulatory processes have been followed. Another industry person said that the hike in insurance premiums was largely done by companies that have private equity investment, and then the overall industry followed suit. 'PE funds operate on 5-7 year cycles focused on exit multiples and valuation growth, and therefore they play a significant role in operational decisions, including product pricing, capital structuring, and business strategy,' he said, asking not to be named. In January, Irdai prevented insurers from raising premiums for policyholders aged 60 and above by more than 10% per year without prior approval. While issuing the guidelines, the regulator said it had observed a steep increase in premium rates under some health insurance products offered to senior citizens, while noting that this group of people was impacted the most when the premium rates are raised.
Time of India
04-06-2025
- Business
- Time of India
Unregulated lending may soon be banned
The government is likely to introduce a bill in the upcoming monsoon session of Parliament to ban unregulated lending activities, aiming to prevent fraud and protect citizens. This bill will not affect informal lending among relatives. It prioritizes citizens' benefits over the Insurance Amendment Bill, seeking to raise foreign investment in the insurance sector. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: The government is likely to introduce a bill banning any lending activity not authorised by the Reserve Bank of India (RBI) or any other law to prevent comments have been received and final consultations are going on with the law ministry on the Banning of Unregulated Lending Activities Bill , said a senior government bill may be introduced in the upcoming monsoon session of Parliament, which will be held from July 21 to August 12. It will not cover informal lending among relatives."The idea is to bring the bill in this Parliament session, and we may even prioritise it over the Insurance Amendment Bill , given that citizens will be directly benefited from its implementation," said the official, who did not wish to be Insurance Amendment Bill seeks to raise the cap on foreign investment in the insurance sector to 100% from the existing 74%.The draft bill was put out for stakeholder comments as another step to rein in several digital loan apps for unregulated lending and complaints about their predatory recovery practices. The new bill, along with the Banning of Unregulated Deposit Schemes Bill enacted in 2019, is expected to strengthen and streamline both lending and deposit taking activities in the country and rein in any unregulated firms while plugging the Unregulated Deposits Scheme Bill, the Central Registry of Securitization Asset Reconstruction and Security Interest of India is mandated to create and maintain a central database of deposit takers in year, the government had informed Parliament that Google had suspended or removed more than 2,200 fraudulent loan apps from its Play Store between September 2022 and August official said digital lenders had raised some concerns, which had been addressed. "As long as they are partnering with any regulated entity, including non-banking finance companies or those regulated through the State Money Lenders Act, it is not in violation of the proposed bill," he states would also be aligning their Act with the proposed bill to ensure strict implementation, he said. The government had earlier sought comments till February 2025.
Time of India
14-05-2025
- Business
- Time of India
Axis Max Life to act on listing after monsoon session, eyes margin stability
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel As Axis Max Life gears up for a potential direct listing following amendments to the insurance law, Managing Director and CEO Prashant Tripathy discusses the company's growth strategy, evolving product mix, distribution performance, and regulatory developments in an interview with Shilpy Sinha. Edited Excerpts:We want to benchmark ourselves against the private industry's growth, with a goal to consistently outperform by 300–400 basis points. I would not read too much into April's numbers, for us or the industry, as it is typically the smallest month, coming right after a heavy March. Distributors tend to be slower in April. We grew at 24%, which I am pleased with, while the private industry grew around 2%. Things should pick up from here. I expect private industry growth to be in the low teens, and we should grow 300–400 basis points ahead of we have consistently outpaced the private industry, you are right that growth has been slower than in previous years. That said, by the end of the fiscal year, both the industry and we delivered strong numbers, the private sector grew 15%, while we grew around 20%. For two consecutive years, Axis Max Life has posted 18% growth, almost double the private industry's average. Our market share has increased to 9.8%, up 37 basis we are very optimistic. It is not just the regulator-our shareholders, promoters, and management are aligned on this. Given our current structure, where our holding company is listed, collapsing the structure to directly list Axis Max Life is the efficient path. We are working towards it and are hopeful that the Insurance Amendment Bill will enable us to proceed. Once that is approved, we will move immediately. That is what we have conveyed to the regulator. I appreciate the regulator's push for more listed insurers, not only to foster competition, but also for greater transparency and investor confidence. We are ready and would be among the first to go for a direct listing. Our current structure is suboptimal, and a direct listing makes strategic philosophy has always been to work within a target margin range while focusing on growth. We are not looking for high margins of 27–28%. Our target range is 24–25%, and we delivered 24% this year. If we achieve higher margins, our VNB (Value of New Business) growth will exceed sales growth. But 24–25% is the corridor we aim to operate proprietary channels performed very well, growing by 30%. Bancassurance grew by around 13%. With Axis Bank , there were some challenges around product mix, which we have been actively and it's not just us, this is a industry trend. Due to liquidity concerns, banks focused more on building deposits, with fee-based income, including insurance, taking a back seat. But this is changing. Deposit growth is picking up, and we expect renewed focus on fee income. For Axis Bank, we are targeting a rise in contribution to around 15%. Besides Axis Bank, which is a key promoter and strong partner, we have longstanding relationships, like the one with Yes Bank and have also added several new banking partners in recent years. Collectively, these will continue to drive products slowed industry-wide due to strong equity market performance and rising yields. As markets stabilize, we expect a renewed focus on non-PAR products from our side. Last year, ULIPs accounted for 46% of our product mix. This year, we expect non-PAR to increase by 3–4%, with par products also gaining. Our ideal product mix would be- ULIP at 35–40%, non-PAR around 30%, par at 15–20%, with the remainder split between annuity and protection products.
Time of India
27-04-2025
- Business
- Time of India
Bill proposing 100% insurance FDI likely in monsoon session
NEW DELHI: The Insurance Amendment Bill , which proposes 100% FDI in the insurance sector, may be introduced in Parliament in the upcoming session, sources said. The draft bill is ready and will be placed before Cabinet for its approval soon, sources said, adding, after Cabinet nod the Department of Financial Services under the finance ministry would begin the process for introduction of the Bill in Parliament. The ministry hopes to table the Bill in Parliament during the upcoming monsoon session, sources said. Monsoon session usually begins in July.
