India’s insurance industry stands at the cusp of transformative change, driven by a series of strategic initiatives spearheaded by the IRDAI, aim to enhance operational efficiency, protect policyholder interests, and align the sector with global best practices.
In a significant move to modernize premium payment processes, IRDAI has unveiled the Bima-Applications Supported by Blocked Amount (Bima-ASBA) system. Effective from March 1, 2025, this mechanism allows policyholders to authorize the reservation of premium amounts in their bank accounts via the Unified Payments Interface (UPI). The funds remain in the account until the insurance policy is issued, ensuring a secure and transparent transaction process.
Addressing concerns over the affordability of health insurance for the elderly, IRDAI has mandated that insurers limit premium increases for senior citizens to a maximum of 10% per annum. This directive seeks to shield older policyholders from abrupt and substantial premium hikes, which have previously escalated by 20–30% every few years, rendering continued coverage financially burdensome.
In its ongoing effort to align India’s insurance sector with international standards, IRDAI is advancing the implementation of a risk-based capital framework and updated Indian accounting standards. These regulatory enhancements, slated for rollout over the next 18 to 24 months, are designed to fortify the industry’s resilience against emerging risks and ensure robust financial health.
However the Insurance education and awareness still remains at backseat, with no significant effort from the Insurance regulator to spread the concept to masses. Platform like Bima Sugam will help to increase reach but it cannot be substitute of spreading awareness among masses. The training of Insurance Agents and intermediaries has been diluted which may result in increase in misselling.
