49% insurance FDI to boost sector, says IRDA chief

'Transparency needed to curb misselling'

The government is expected to propose a huge economic agenda in the Winter session. With the Insurance Bill slated to be one of them, the insurance regulator Insurance Regulatory and Development Authority (IRDA) Chairman already seems bullish about the potential of the increased foreign direct investment (FDI) in insurance, in case it is approved.

“In 1999, before FDI was approved in the insurance sector, the insurance penetration was 1.7 per cent and it has gone up to 3.9 per cent now. The number of companies, number of agents and employees have gone up in the sector as well after the introduction of FDI. So, we can straightaway claim that approval for 26 per cent FDI has been successful,” IRDA Chairman T S Vijayan said.

“Nearly 2.5 crore will join the job market and start earning each year for the next 20 years, so new life that can be added by life insurers is 2.5 crore apart from the existing customers. The number of cars and scooters being added, and the increase in hospital bills also provides an opportunity, and so, if FDI is increased to 49 per cent, the potential is huge in India,” Vijayan added.

Coming down heavily on the innovations by insurance companies, the IRDA chief mentioned that the companies should make it more transparent so that consumers can understand it.

“Innovation should not go to the extent of making it very difficult for the customer to understand. We must have a relook at the innovations that we offer and we need to make it transparent for the consumers to understand,” Vijayan said.

If there is a gap in the understanding of the customer and the salesman, I would say that there is misselling. The customer should understand exactly what he is buying so that misselling is removed, Vijayan added.

The IRDA chief said that the Narendra Modi-led government should look at steps to ensure that every citizen in the country is insured.

“The government should think about a ‘Jan Bima Yojana’ as well along the lines of the Jan Dhan Yojana so that all the citizens have insurance,” Vijayan said.

It launched in August this year with an aim to deepen the banking penetration, and the banks have so far responded by opening over 6 crore basic accounts of the targeted 7.5 crore.