IRDAI pushes insurers to cut costs, improve affordability
The Insurance Regulatory and Development Authority of India (IRDAI) has urged insurers to reduce customer acquisition costs and expenses of management (EoM) to improve profitability and make health insurance more affordable.
Speaking at an industry event in Kolkata, IRDAI Member (Non-Life) Deepak Sood emphasised the need to address the challenges faced by the “missing middle” — individuals who are neither affluent nor covered under government schemes such as Ayushman Bharat Pradhan Mantri Jan Arogya Yojana.
He noted that high distribution and operational costs are a major barrier to affordability. The regulator has already introduced reforms such as the “use and file” mechanism to encourage product innovation and faster market launches.
The call aligns with findings from the Economic Survey, which highlighted that rising acquisition costs have kept the sector in a low-penetration, high-cost equilibrium, limiting wider insurance inclusion.
Industry urged to tackle acquisition costs for better value delivery
The insurance sector must urgently address high acquisition costs and expenses of management to improve profitability and deliver better value to customers, according to IRDAI.
Deepak Sood stressed that every product, distribution channel, and business line must evaluate the value delivered to customers, as rising costs are eroding affordability. He highlighted that controlling these expenses is essential not only for improving margins but also for expanding insurance coverage.
The issue is particularly critical for the “missing middle”, a segment that struggles to access adequate health insurance due to affordability constraints and lack of eligibility for government-backed schemes.
Industry stakeholders believe that reducing upfront commissions, optimising distribution models, and leveraging digital channels could help bring down costs. This, in turn, would enable insurers to offer more competitively priced products and expand the customer base sustainably.
Govt explores insurance support for exporters amid West Asia crisis
The government is exploring new insurance support mechanisms to help exporters navigate disruptions caused by the West Asia conflict, Union Minister Piyush Goyal said.
An inter-ministerial group is closely monitoring developments and engaging with exporters affected by rising freight costs, insurance premiums, and logistical challenges due to disruptions in maritime routes, particularly around the Strait of Hormuz.
The government is consulting agencies such as the Export Credit Guarantee Corporation to design schemes that can mitigate risks for exporters whose shipments are delayed or disrupted.
Officials indicated that support measures may include enhanced insurance coverage and risk-sharing mechanisms. With West Asia being a key export destination, the initiative aims to stabilise trade flows and protect exporters from financial stress amid geopolitical uncertainty.
Bima Sugam to launch standardised insurance products this year
The Insurance Regulatory and Development Authority of India is set to roll out standardised insurance products on the upcoming Bima Sugam platform, beginning with motor and health segments, followed by life insurance.
Motor insurance products are expected to go live by July, health in August, and life insurance by September. Separate industry committees have been formed to design uniform products, with differentiation allowed in pricing, underwriting, and customer experience.
Alongside this, IRDAI has proposed creating a Public Insurance Repository (PIR) to strengthen sector-wide data infrastructure, building on the existing Insurance Information Bureau framework.
The initiative aims to reduce duplication, improve automation, and enhance underwriting analytics. Bima Sugam is expected to simplify access to insurance products while promoting transparency and efficiency across the ecosystem.
FM assures strict action against insurance sector misconduct
Finance Minister Nirmala Sitharaman has reaffirmed that any wrongdoing by insurance companies will be dealt with strictly by regulators. Addressing the Rajya Sabha, she emphasised that insurers are subject to systematic oversight by IRDAI, and violations such as mis-selling, misleading claims, or failure to ensure product suitability are penalised.
She highlighted recent enforcement actions, including penalties imposed on multiple insurers for unfair practices and operational lapses. The minister also urged policyholders to report grievances through official channels, including regulatory platforms.
On expanding insurance coverage, Sitharaman stated that 25,000 gram panchayats will be brought under insurance inclusion initiatives. This move aligns with the broader goal of improving penetration and extending coverage to rural and underserved regions across the country.
No clear link between medical inflation and premium hikes: Govt
The government has stated that there is no conclusive evidence linking rising health insurance premiums directly to medical inflation, challenging a key justification often cited by insurers.
According to Minister of State for Finance Pankaj Chaudhary, the Insurance Regulatory and Development Authority of India has not conducted any specific study establishing a direct correlation between the two.
He noted that premium increases are influenced by multiple factors, including ageing policyholders, higher sum insured, evolving product features, and claims experience.
To ensure fairness, insurers are required to base pricing revisions on actuarial analysis and credible risk data, while also considering customer grievances and market feedback. The move underscores the regulator’s push for greater transparency and accountability in premium determination.
Public Insurance Registry to boost transparency and data access
The proposed Public Insurance Registry (PIR) is expected to modernise the insurance sector’s data infrastructure and enhance transparency, according to IRDAI Chairman Ajay Seth.
The PIR will function as a consent-driven digital platform covering the entire insurance lifecycle, from policy issuance to claims settlement and grievance redressal. It aims to provide structured, interoperable data access across stakeholders while maintaining legal compliance.
By reducing information asymmetry and improving data quality, the initiative is expected to strengthen consumer confidence and support more effective regulatory oversight.
The registry will also enhance fraud detection and enable data-driven decision-making, contributing to a more efficient and accountable insurance ecosystem aligned with the vision of expanding insurance inclusion in India.
