Insurance sector waiting for ‘Annaatthe’ for IRDAI

Chennai: Is there a need for a Chairman for Insurance Regulatory and Development Authority of India (IRDAI) is the question that has started popping up. On Wednesday a reporter asked ICICI Lombard General Insurance Company Ltd’s officials at a press meet about the need for a Chairman to head IRDAI? The sectoral regulator has been […]

Chennai: Is there a need for a Chairman for Insurance Regulatory and Development Authority of India (IRDAI) is the question that has started popping up.

On Wednesday a reporter asked ICICI Lombard General Insurance Company Ltd’s officials at a press meet about the need for a Chairman to head IRDAI?

The sectoral regulator has been functioning without a Chairman since May 2021 and it is business as usual at the Hyderabad headquartered office with the savings of over Rs 4 lakh per month as salary per month.

A senior industry official preferring anonymity told IANS: “Perhaps the government can give the necessary powers to the IRDAI Members and abolish the Chairman’s post. The other option is to have IRDAI as one more wing of the Reserve Bank of India (RBI).”
Continuing further the official added: “The industry is waiting for an ‘Annaatthe’ or an action oriented Chairman for IRDAI as many things are in a limbo.”

“The existing Members are not even responding to the letters/mails sent to them. At least the earlier Chairman used to respond to the letters and would meet the industry officials when a meeting was sought,” the official bemoaned.

What the official seems to be true as queries sent to some of the Members by IANS on several aspects were not even acknowledged nor they answer or return the calls.

Meanwhile, the government has called for applications for the post of Member (Non-Life) as the incumbent T.L.Alamelu’s tenure is ending in May, officials said.

Be that as it may, industry officials had told IANS that the incoming IRDAI Chairman has important tasks like setting the house in order, working towards its core mission of policyholder’s interest, speeding up the new company licensing process, avoiding micromanagement and others.

They also said upward revision of motor third party premium, simplification of its regulations, leveling the playing field are some of the other areas, the officials added.
Industry officials told IANS that the IRDAI has not licensed any new insurer during the past couple of years.

Even the Andhra Pradesh government’s initiative to set up a crop insurance company is getting delayed, they said.

“Globally in the insurance sector, many things are changing focussed on safeguarding the policyholder’s interest, growing the industry and making the players remain solvent,” a head of a large non-life insurer had told IANS on the condition of anonymity.

The industry officials told IANS that IRDAI had gone into micro-managing the sector with various regulations warranting more structures for monitoring resulting in undesirable outcomes.

“The moment you go into granularity, it takes away the focus on insurance. The IRDAI should first address the structural issues,” a CEO of a private insurer told IANS.

N.Rangachary, the first IRDAI Chairman, told IANS that it is time to do a review of IRDAI since it is more than two decades old and several senior industry officials have voiced their views to IANS.

“There should be a review committee to go into all regulatory aspects. It is time to see whether the original goal of forming the regulatory body has been fulfilled and if not, the action to be taken,” Rangachary suggested.

Industry officials also told IANS that IRDAI should not be a parking lot for retired bureaucrats as a post retirement perk.

“What kind of energy can a retired bureaucrat or an official from public sector insurance companies bring in? The financial services industry is changing fast. But the insurance regulator is still in the year 2000,” a CEO of an insurance company not wanting to be named told IANS.

“There is nothing wrong in having a seasoned civil servant as the Chairperson of the Authority, who can bring to bear her/his unalloyed administrative capabilities, ably assisted by the full-time Members, who are from insurance background, viz., life, non-life, reinsurance and actuarial, which has been the case as of now,” D. Varadarajan, a Supreme Court lawyer specialising in Insurance and Corporate Laws and a Member on KPN Committee on Insurance Laws Reforms told IANS.

“In the past, the Government has also experimented with industry insiders as the Chairperson,” he added.

Industry officials also told IANS that the ease of doing insurance business in India is almost nil.

“Ease of doing insurance business in India? You must be joking. One should ask the industry players on how IRDAI is a control freak. The licence permit raj is in full force in the insurance sector,” a senior industry official preferring anonymity told IANS.

The IRDAI not only licences the insurers, intermediaries but also the outsourcing agencies like the healthcare claim processing companies.