The Insurance Regulatory and Development Authority of India (Irdai) is considering the creation of a body like the state-level bankers’ committee (SLBC), Chairman Debasish Panda (pictured) said on Tuesday.
“Several state governments have taken the initiative to constitute state-level committees and some states have constituted district-level committees,” Panda said while speaking at the Business Standard BFSI Insight Summit.
According to the arrangement, district-level units will be driving state insurance benefits.
The SLBC is the highest body of bankers at state level, ensuring coordination between the government and banks. This is in agreement with what Panda had said in May.
Panda expressed concern on rising cyber and climate-related risks and the need for insurance companies to develop policies that would address those.
The frequency of natural disasters has gone up, which necessitates a proactive approach and the need to adapt by leveraging advanced climate modelling to anticipate and mitigate climate-related risks. “Policies aimed at promoting sustainability and resilience, while factoring in climate-related concern, must be developed,” he said.
Against the backdrop of the increased usage of technology and the associated risks in the financial sector, the regulator emphasised the difficulty in forming regulations that would provide solutions to those.
“We need to create an agile framework that will allow revisions and adaptations to accommodate emerging trends and risks,” Panda added.
On the other hand, the regulator has taken initiatives to create an environment conducive to the growth of insurance. This is through ease of doing business, enhancing road opportunities, promoting healthy competition, and exclusive technology adoption.
Further, the regulator said the movement towards risk-based capital would enable insurers to have capital commensurate with what had been provided to them.
The regulator is enhancing customer experience by introducing measures including the movement towards 100 per cent cashless legal settlements in health insurance and interoperability, which is a work in progress. It is making efforts to strengthen the Insurance Information Bureau. Further, the proposed amendments to the Insurance Act will create a robust and innovative insurance landscape with various players catering to different needs and different regions.
Irdai recently initiated changes like simplifying the language of insurance contracts and gave the mandate to general insurers to include the basic features of health insurance policies in the customer information sheet of the policyholder.
The regulator is taking steps to make the sector future-ready by achieving the three pillars, which it aims to do by around 2025. The pillars are adopting a risk-based capital approach, convergence with International Financial Reporting Standards, and transitioning from a rule-based approach to a principle-based one.
Speaking on the industry’s transition from a rule-based regulatory regime towards a principle-based one, the chairman highlighted the importance of a supervision framework which was strong and personalised and would necessitate adopting a risk-based approach.
“The three pillars are something we are thinking about in mission mode, and work is in progress. All this will not be possible without the extensive use of technology, and therefore, insurtech players are being utilised in a big way,” Panda said.