IRDAI Member Says Insurance Sector Needs To Reorient Itself

Mumbai: While the domestic economy is growing well, the insurance sector has been unable to keep pace with it unlike the banking sector, BC Patnaik member life Insurance Regulatory and Development Authority of India (IRDAI) said on Tuesday.

Patnaik said that although the life insurance sector has covered a substantial 52 crore lives, including the adult population through initiatives such as the Pradhan Mantri Jeevan Bima Yojana, challenges persist, with an average inadequate sum assured in life insurance and a notable mortality protection gap.

Speaking at the National Insurance Academy, Insurance Summit, Patnaik said that the mortality protection gap in India is a whopping 83 per cent. In absolute terms, India’s mortality gap is Rs 1320 lakh crore. Of the Rs 60 lakh crore of assets under management of the insurance sector, Rs 55 lakh crore is life insurance. These numbers have the potential to grow 10 times in 10-15 years, he said.

According to Swiss Re, the mortality protection gap is defined as the difference between the amount needed to substitute a household’s future income in the event a major breadwinner dies, and the existing resources available to repay outstanding debts and maintain living standards.

“The economy is growing higher and the insurance sector is unable to catch up. On the other hand, the banking sector has made better strides. The housing sector is booming, SBI’s home loan is way over Rs 5 lakh crore.”

While the general insurance sector shows upward growth, only 5 per cent property insurance coverage and an overall (life plus general insurance) penetration of 4 per cent indicate a lag in keeping pace with the expanding economy.

He urged the insurance industry to be aggressive, reorient itself, rework on its approach, adapt technologically, and invest in human capital to navigate the evolving landscape successfully.

A failure to support economic growth can lead to adverse effects, he warned.