Irdai wants life insurance companies to consider 50% premium growth in 5 years


In a first-of-its-kind advisory, the Insurance Regulatory and Development Authority of India (Irdai) has proposed five-year premium growth targets for life insurance companies, with the aim of doubling penetration insurance in the country.

In email communications to managing directors and CEOs of life insurance companies, the insurance regulator suggested a gross written premium (GWP) growth target for each insurer.

“Irdai has given each life insurer indicative targets in terms of total GWP for the next five years,” Rushabh Gandhi, deputy managing director, IndiaFirst Life Insurance, told Business Standard. “He also offered to discuss any regulatory support the insurer might need to meet the target. All in all, this will help to significantly increase insurance penetration in the country.

While Irdai has proposed a compound annual growth rate (CAGR) target of 30% in GWP over five years for leading insurers due to their large base, it has suggested a CAGR of 50% for small ones. companies.

GWP is the sum of the new business premium and the renewal premium. The regulator has also identified a state for each insurer where they should spearhead the push for increased insurance penetration.

“Irdai sent separate emails to individual companies prescribing growth targets. All life insurance companies have been given targets. The regulator aims to increase insurance penetration in the country over the next five years. Insurance penetration as a percentage of GDP is low and the regulator wants to double it in the next five years. If every insurance company drives growth, the overall insurance penetration will definitely increase,” said the CEO of a life insurance company.

One-of-a-kind advice

  • Irdai has prescribed targets based on company size and distribution
  • The objective is to increase insurance penetration
  • Major insurers received premium growth forecasts of 30%
  • For small businesses, it varies from 40 to 50%
  • Life insurance penetration is 3.2%, while overall insurance penetration is 4.20%.

Questions about an email sent to Irdai did not elicit a response until press time.

According to Irdai’s annual report, the life insurance penetration in India is 3.20% and the overall insurance penetration in the country is only 4.20%. Insurance penetration is measured as a percentage of GDP. “As Irdai has a developmental role, it is perfectly within its purview to prescribe targets for insurance companies,” said an insurance industry veteran.

Although the regulator has prescribed targets for individual life insurance companies, it is unclear whether insurers will face legal action if they fail to meet these targets.

“There’s no clarity on the repercussions if companies don’t meet the target. It’s a five-year plan and it’s not that the regulator won’t ask us to show our progress every two months. For now, the regulator has not said that part of the CEO/CEO compensation will be linked to such objectives,” the person quoted above said.

Over the past few months since Debasish Panda took over the chairmanship of Irdai, the regulator has introduced a series of regulatory changes, making it easier for insurance companies to create innovative products and bring them to market. .

It has also reduced the compliance burden for insurance companies to some extent.

Irdai has extended the “use & file” procedure to most life insurance products, excluding individual savings, individual pension and annuity products. This basically means that life insurance companies can launch these products without prior approval from the insurance regulator. It reduced the capital required by insurance companies offering policies under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) by almost 50%.


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