The Insurance Regulatory and Development Authority of India (IRDAI) has suggested the government to ease the minimum capital requirement of Rs 100 crore and permit the regulator to fix the amount depending upon business plans of the prospective company.
Doing away with the minimum capital requirement of Rs 100 crore would allow entry of small, specialised and niche players, which would help in increased insurance penetration and density in the country.
“Like in the banking system, we have microfinance institutions, regional banks, and small finance banks. So, we have all categories of banks then there are non-banking financial companies. In the insurance sector also, we should have different size players to come into the market so that they can operate in smaller geographies,” IRDAI Chairman Debasish Panda said in an interview.
Entry of smaller and specialised players would help in increasing insurance penetration and density, he said.
“So, in this context we are suggesting to the government to kindly look at the existing provisions and see whether you could remove the Rs 100 crore cap minimum requirement. The regulator can frame the regulations based on the size of the company that they (promoters) are going to set up. For the micro insurance company it may be X amount, regional companies operating in a bigger larger geography could be Y amount,” he said.
Going forward, he said, the relaxation in capital requirement would help in creating specialised or a mono line for segments like motor and properties.
“Why not create that kind of framework in our statute which allows not alone micro, small, regional companies etc but also those catering to niche products,” he added.
Panda also said IRDAI is working on Bima Sugam, which will act as a game changer in the insurance sector by providing a one-stop platform for multiple services including sale of policy, renewal and settlement of claims.
