MUMBAI: Insurance industry needs Rs 50,000 crore investment every year to double insurance penetration in next five years, according to Debasish Panda, Chairperson, the Insurance Regulatory and Development Authority (IRDAI). 

Indian insurance market, which is currently the tenth biggest in the world, will be the sixth biggest by 2032. “If we have to double the penetration, every year there is a need to infuse an additional Rs 50,000 crore. Some of it will come from the existing players itself by way of ploughing back their profits, some of it will come as an additional capital,” said Panda while addressing the Insurance and Pensions Summit organised by the Confederation of Indian Industry (CII) in Mumbai.

“After March, I intend to meet the chairpersons of all the insurance companies to drive home the point that they have to factor this and start planning to infuse more capital. I’m glad some players have already started to think (around to infuse more capital) that,” he said.

He appealed to the stakeholders to increase investment as the sector offers attractive returns. “I would like to reach out to the conglomerates who are present in this country, individual investors who are interested to invest. If you look at return on equity of top five insurance companies, it is 20%, the average is nearly 16% and 14% for non-life and life insurance,” Panda said. “This is the time when the funds, which are available should get channelised into insurance sector,” he said.

He said insurers have to go beyond the present distribution arrangements with scheduled commercial banks and have bancassurance arrangements with non-bank lenders, co-operative banks and also payment aggregators. He urged insurance firms to explore new opportunities and coverages to expand the reach of products.

“Property insurance penetration is less than 4-5%. Over 50% of vehicles are uninsured. In health portfolio, there is the missing middle in the health insurance, which will be 40-50 crore people. The industry has to come forward and tap these opportunities. They have to come to us with ideas, they can approach regulators, civil servants and political establishment to impress upon them the new areas to increase insurance penetration,” Panda said.

Manoj Anand, whole-time member of Pension Fund Regulatory and Development Authority, said there is a need for insurers to develop annuity plans, which protect an individual from inflation risks. He said PFRDA expects Rs 11,000 crore to flow into annuity plans floated by insurers in the next five years after a holder reaches retirement age.

Insurance distribution 
Debasish Panda, Chairperson, IRDA, said insurers have to go beyond present distribution arrangements with commercial banks and have bancassurance arrangements with non-bank lenders