Comments
The slew of announcements made by the IRDAI on Friday are customer-centric reforms and will help attract long-term capital to the sector, according to industry participants.
The foremost reform in this aspect is allowing PE players to invest directly in insurance companies, as this will pave the way for fresh investments, especially in insuretech and new-age insurance companies.
PEs appetite for the insurance sector has been increasing due to improved demand post the pandemic, strong India growth story and regulatory push for better insurance penetration. This move will make investing much easier, which is good for the sector as a whole, said industry players.
At present, Warbug Pincus-promoted IndiaFirst Life Insurance is the only PE-backed insurance company in the sector.
“The relaxation in investment criteria for venture capital funds will help attract a higher flow of capital to India’s insurance sector, resulting in greater innovation, deeper insurance penetration, and better offerings for consumers,” said Ishaan Mittal, MD, Sequoia India.
Other reforms
The regulator also eased norms for raising funds via subordinate debt or preference shares, relaxed shareholder norms for investors and promoters, and reduced solvency requirements--which is expected to free up capital of Rs 3,460 crore for insurers.
All of these are seen ensuring easier access to capital, which can then be channeled into technology, product innovation and increasing awareness, industry players said, adding that better margins and less capital constraints will also encourage long-term, sustainable investments.
“The easing of entry norms and clarity around promoters/investors will also help foster entry of new players in the industry, thereby accelerating the sectoral growth,” said Sumit Rai, MD and CEO, Edelweiss Tokio Life Insurance.
Customer-centricity
Other reforms aimed at improving insurance penetration in the country, such as allowing more tie-ups for intermediaries and corporate agents, and easing registration norms, will also ensure that long-term money is invested in distribution and reach, according to industry players.
While the increase in the number of tie-up limits will enable policyholders and prospects to have a wider choice, reforms targetted at ease of doing business will simplify the process of setting up an insurance company and encourage new players, they said.
“This will improve access and facilitate the reach of insurance to the last mile,” said Prasun Sikdar, MD and CEO, ManipalCigna Health Insurance, adding that these measures will encourage innovation, strengthen the distribution model and “certainly make the sector more attractive for investment”.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.