The Insurance Regulatory and Development Authority of India (IRDAI) plans to reform regulations and relax restrictions on insurers to allow the creation of new captives and microcaptives.
Current minimum startup capital requirements for insurers of a ₹100 crore were a “barrier rather than a facilitator”, its new chairman Debasish Panda told insurance industry officials on Wednesday, according to reports.
“There is a need for changes in the regularity framework,” he said. “Market conditions are changing, and the regulations were framed when the industry was beginning to grow. Then there was need for tougher regulations, but today, the industry has matured, and there is competition.”
Instead, he promised “light regulation” and “more tech-based supervision” as it moved from a rules-based to a principles-based system.
That would include creating a framework to encourage new entrants to the market and a greater range of vehicles.
“The current provision as per the statute is that one has to invest ₹100 crore to start an insurance business in India. We are of the opinion that we should allow multiple differentiated players, such as captive insurers, standalone micro-insurers, niche players and regional entities to enter the insurance space,” Panda said.
“We will request the government to amend the Act and remove this so-called minimum requirement,” he added.
Panda also said the regulator would aim to encourage global investors and focus on areas where insurance penetration has been low.
The regulatory review would include an appraisal of the effectiveness of the existing insurance ombudsman system, he added.
IRDAI, Regulations, Restrictions, Captive, Insurance, Reinsurance, Debasish Panda, India