Insurance Regulatory and Development Authority of India (IRDAI) Chairman Debasish Panda has asked insurance companies to augment their capital base in order to support the fast pace of growth expected for the insurance sector.

“I would like all of you to go to your boards and think in terms of augmenting your capital, because, going forward, we expect growth will be speedier than before, hence, more capital will have to be pumped into the sector,” Panda said at the FICCI Insurance Summit on Wednesday.

“The investment landscape is also being rebuilt to attract more investment through the FDI route. The limit has been enhanced to 74 per cent from 49 per cent. Companies which have a foreign partner should look at this opportunity to bring in more capital and grow even faster than they have been growing.”

In this regard, the shift to a risk-based capital regime from the current factor-based solvency regime, and the ongoing shift to IFRS (International Financial Reporting Standards) will also help the industry in efficient use of capital and to establish a real-time risk profile.

New applications

Panda said after giving three new licences in FY23, IRDAI is now considering 20 other applications for new insurance companies. The regulator last issued a licence for a new life insurance company in 2011, and for a general insurer in 2017.

“In the recent past, three new insurance companies have registered, two life and one general. And 20-odd applications are in process with IRDAI,” he said, adding that while earlier, delays were usually at the regulatory end, IRDAI has been nudging a few players who are taking time to file their R2 level applications.

Kshema General Insurance, Credit Access Life Insurance and Acko Life Insurance are the latest companies to receive their licenses. Excluding them, there are 23 life insurers and 33 general insurance players in the country.

Renewed interest in the insurance sector has been driven by rising demand, recent regulatory guidelines, and technological advances. Reforms pertaining to registration guidelines, minimum criteria, business compliance and lock-in period have brought clarity, and made it easier for investors to come to the sector and at the same time made the sector “more attractive both from an RoI (return on investment) and RoE (return on equity)” perspective, Panda said.

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He also called on insurers to come out with a white paper, with concrete action plans for increasing insurance penetration to achieve the objective of ‘Insurance for All’ by 2047. The industry has garnered total premium of over Rs 10 lakh crore in FY23 so far, with assets under management at Rs 59 lakh crore, a growth of 16 per cent YoY as of February.