IRDAI Chairman Ajay Seth Announces
6 Major Reforms over next 4-6 months:
1. Overhauling distribution
and cost structures
• High distribution cost affect Insurance
affordability - renewal of old policy should cost less in commissions than
finding a brand-new customer. the regulator is aligning commissions with
long-term value rather than short-term sales. Lowering systemic costs can make
products more affordable, improve value for policyholders and strengthen
insurers’ sustainability.
2. Launch of "Bima Sugam"
• A new digital marketplace
(expected by May 2026) where you can compare different insurance policies in
one place. Competition will likely drive down costs for consumers.
3. Digital Public
Infrastructure (DPI) - discussion paper being prepared:
• This is a secure, digital
system for policy and claims data. It will allow for faster insurance
approvals, easier switching between companies (portability), and better fraud
detection.
4. Better Accounting standards
• Another reform is adoption
of Indian Accounting Standards for insurers from the next financial year,
aligning reporting with international standards.
5. Better Financial standards
• Developing dynamic
Risk-Based Capital framework that replaces the current formula-based solvency
regime.
6. Higher transparencies to
generate trust
• Companies to publish more
data on their returns, claims, and settlements, so that Insurers can make a better
choice.
OUR
VIEW:
As mentioned in the Union Budget 2026-27, the Sabka Bima Sabki Raksha Act (2025) aims to make insurance
cheaper and more available by inviting more players into the market, through
initiatives like 100% Foreign Investment, lower Entry Barriers and less
Paperwork. In our News Summary, we had highlighted that report, along with reviewing its impact
on the Regulatory space. The issues on high costs, along with low settlement
claims and falling trust of Insurers have been flagged over last few months by
the Regulators themselves. These have been posted in our website and analysed.
The "Bima Sugam" scheme
mentioned has been in abeyance for quite some time. It was however good to note
that now, a timeline of May 2026 has been given for its launch. Again, mention
of discounts in old policies have been there. However, those holding onto old
policies do get discounts in form of "No claim Bonus". So, it will be
interesting to see in what other way, the prices can come down - especially for
the old policies: and to some extent, the new policies too. With rising
International competition expected in coming months from 100% FDI, the newer
products from there, can be expected to be not only cheap, but also having
better service and more variety in the products.
The Insurance sector needs to get
all its acts together - the sooner, the better
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Link
- https://www.financialexpress.com/money/insurance/regulator-plans-major-steps-to-lower-insurance-costs/4154691/
