The Insurance Regulatory and Development Authority (IRDAI) board is expected to take up the 11-point reforms for the insurance industry recommended by its advisory council when it meets on Nov 25, 2022.
Says Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd: "These include the relaxation of EoM limits, an increase in the maximum rate of renewal commission, and the implementation of premium discounts for directly sourced policies. "EoM limit relaxation will benefit the entire industry. It will benefit the larger business insurance players more because they have a larger renewal book, and the renewal book is likely to be given more weightage." Currently, there is no flexibility for insurers with management expenses lower than 100 per cent. "If approved, this modification could give more headroom to such insurers to invest in the right strategies," Naidu adds.
Says Naval Goel, founder and CEO of PolicyX.com: "The IRDAI needs to open up the restrictions from the industry, especially on the distributor remuneration side. Currently, the restrictions are in payout, making it unviable for distributors to sustain the business."
Goel says IRDAI should allow this and provide the flexibility to insurers to decide how much they want to pay. That way, a distributor getting higher quality business or getting business from lower penetration areas can be adequately compensated. It will likely increase the penetration levels.
"Apart from that, currently, there are lots of similarities between brokers and web aggregators, and there is no point in having separate distribution licenses. Both these licenses can be merged to create a single license," he adds.
The regulator may also reduce the minimum capital requirement of Rs 100 crore to start an insurance company, thus, making it possible for more micro and regional insurance companies to enter the business. In addition, the rules on investments in the insurance sector may also see some relaxation, and the regulator's permission may not be required to raise capital.
It is also expected that banks may be permitted to have tie-ups with three or more general, life, and health Insurance companies for bank assurance purposes.