CHENNAI: The three-year stint of Insurance Regulatory and Development Authority of India (Irdai) chief Debasish Panda saw a healthy tilt towards consumer protection. Panda’s tenure is scheduled to end on Thursday.
His big moves — capping premium hikes for senior citizen health policies at 10%, increasing surrender value for holders unhappy with their policies and reducing the eligibility criterion from two years to one — have forced the industry to review business models. Following the rollout of these decisions, life insurers have cut first-year commissions on new policies and clawed back to overall commission payouts. The fallout has been an overall de-growth for the industry in terms of premium collections.
These moves come against the backdrop of India’s historically low insurance penetration — 2.8% in life and 1% in non-life as of 2023. With the industry already grappling with the Budget’s push towards the new tax regime that will not give any benefits to taxpayers for buying insurance, Panda’s moves have forced the industry to re-strategise to attract potential customers and devising business models.
Of course, there was a pushback from both general and life insurance companies. While the former complained about rising healthcare inflation and claims, the latter wasn’t happy with the pressure on them to pay higher amounts. But Panda stuck to his guns.
Industry experts say that the pressure to make higher payouts will significantly reduce mis-selling as there will be little incentive in terms of commissions.
Panda also targeted the ills in the banking system that have often led to mis-selling of products. A few months ago, speaking at the State Bank of India’s Annual Business & Economic Conclave, Panda said, “…the bank channel is a very useful channel, but of late, a lot of ills have crept into the system”.
He went on to add that banks should become a distribution model which is low cost. “You don’t need to chase customers. You have to give the option to the customers. No mis-selling, no force-selling…”
While the sector is still adjusting to these sweeping policy changes, the road ahead is also challenging.
One of the most pressing priorities will be the rollout of “Bima Trinity”, Panda’s pet initiative that faced multiple delays and remained unfinished during his tenure. Proposed in 2022, Bima Trinity is an ambitious plan to create an Amazon-like digital platform for insurance sales, servicing and claims settlement.
The project comprises three key elements: Bima Sugam (a digital marketplace), Bima Vistaar (a composite insurance product) and Bima Vahaak (a women-led insurance distribution model). Despite its significance, the initiative has been postponed multiple times — first from January 2023 to June 2024, then to August 2024, and most recently, to mid-2025.
All three components are now in the final stages of implementation. For instance, after extensive discussions, industry players have finalised the product model for Bima Vistaar, India’s first composite insurance policy covering death, personal accident, property and surgical hospitalisation.
The Bima Vahaak portal is nearing completion, with a soft launch planned in April 2025 to onboard Vahaks (women-led distributors).
Beyond Bima Trinity, the transition to a risk-based capital (RBC) framework and International Financial Reporting Standards (IFRS) will be major regulatory developments.
Industry insiders credit Panda with championing the government’s “insurance for all by 2047” vision and advocating for increased foreign participation to spur competition and innovation. He was an ardent proponent of raising the foreign direct investment limit from 74% to 100%.
Under Panda’s leadership, Irdai streamlined 78 regulations into 20, with only 15 directly governing insurance operations. “Panda was as much a technocrat as he was a bureaucrat,” says a senior executive at a private insurer. Panda championed initiatives like the regulatory sandbox and extended the “use and file” procedure across life, general, and health insurance. The “use and file” framework enabled the rollout of products like “pay-as-you-drive” motor insurance and unlimited-claim health policies.
While Panda was able to implement a risk-based capital framework, he was unable to convince legacy insurers on public listing. The challenge for the regulator will be to strike a balance — encouraging public listings while addressing industry concerns.
For the financial sector, these are interesting times. With both the Reserve Bank of India and the Securities and Exchange Board of India being led by new faces, all eyes are on Irdai now.
Source: The Financial Express
Bank’s Asset Quality To Deteriorate Moderately In FY26 And FY27: Moody’s 