Insurance industry should see the current Covid-19 crisis as an opportunity and take steps to expand the protection business, says IRDAI Chairman Subhash Chandra Khuntia.

Addressing the 21st FICCI Annual Insurance Conference, ‘‘India Insurance in the post Covid-19 world”, Khuntia said time has come for the insurance industry to rise to the occasion and help build an industry that will meet the protection needs of the country.

At the video conference, Khuntia highlighted that India’s insurance penetration at 3.7 per cent of GDP is still very low compared to the world average of 7 per cent, and the insurance industry must look to tap the growth potential for protection business during the current Covid-19 times.

Rural market has potential

With COVID-19 now spreading into the hinterland, there is huge growth potential for insurers in tier-2,3 and 4 cities, Khuntia added.

“Prosperity will grow in rural India, especially with good agriculture performance. We should tap this market”, he said.

Khuntia wanted insurers to come up with simple, intelligible and, at the same time, innovative products to meet the protection needs of people. The IRDAI Chairman also urged insurers to devise more ‘job loss’ and ‘income loss’ related products.

He also said there is huge potential for growth in providing products for group insurance and catering to the insurance needs of Small and Medium Enterprises (SMEs).

Khuntia rued that despite prodding, no life insurers are coming with short- term group insurance products. “It is good to be risk averse. But industry should come forward to provide risk cover”, he said, adding that insurers have very little to show on micro insurance and more needs to be done on this front.

The IRDA Chief noted that the country was still in the midst of the pandemic and that people may have to live with it for some more time.

Khuntia urged insurance industry to frame strategies to add 10 lakh agents over the next five years.

As for the performance of insurance industry so far this fiscal, things are not as bad as feared, and all segments — life, health and general — have done reasonably well, he noted. Only life insurance is facing some degrowth, while health and general insurance segments have shown growth.

Challenging times

Speaking at the conference, LIC Chairman MR Kumar said the impact of Covid-19 on the economy was emerging and that the insurance industry in India was not prepared for the pandemic. He said that the world cannot claim that it was unaware of the pandemic and also pointed out that the global economy had been slowing down even prior to the outbreak of Covid-19.

Kumar noted that though the current phase is quite challenging for insurers in terms of new business procurement, the real effect of Covid-19 is yet to be fully seen. “ Insurance Industry should be prepared for the long haul“, he said.

Kumar added that the challenges of Covid-19 cannot be handled by using the conventional methods. He suggested that industry should focus on the elements of acronym ‘Ideas’— Investment, Distribution, Economics and Efficiency; Administration and Solvency.