The insurance industry will need a capital infusion of Rs 50,000 crore per year to double its penetration in the next five years, sector watchdog Irdai's chief Debasish Panda said on Friday.
Debasish Panda appealed to business conglomerates to channelise funds into the sector, saying the return on equity is at a healthy 14 per cent for life insurers and 16 per cent for non-life, while in the case of top five companies it goes up to 20 per cent as well.
It can be noted that the insurance sector is a very competitive industry, with nearly two dozen life insurance companies and over 30 non-life ones. The overall penetration for insurance is 4.2 per cent as of FY21-end.
"If we have to double the penetration, every year there is a need to infuse an additional Rs 50,000 crore," Panda said addressing the annual insurance and pension summit organised by industry lobby CII here.
He said the number has been arrived at after doing an analysis of current GDP growth, inflation and penetration, and also added that he will meet the heads of insurers after March to prepare in pursuit of the same requirements.
"I'd like to reach out to the conglomerates who are present in this country, individual investors who are interested to invest their money," he said.
The Insurance Regulatory and Development Authority of India chief said the target is to double penetration in the next five years, and added that it is possible to insure all by 2047, when the country will be celebrating its 100th anniversary of independence.
India is at present the tenth biggest market in the world and will be the sixth biggest by 2032, Panda said.
Industry is content serving people with traditional or old products, but needs to analyse the newer needs of protection as well, he exhorted.
He asked the players to engage with housing regulators to try and make property insurance compulsory, or impress the need for property insurance with the Union housing ministry.
Insurers also have to go beyond the present distribution arrangements with scheduled commercial banks, and have bancassurance arrangements with non-bank lenders, co-operative banks and also payment aggregators.
"We have to reimagine the way insurance is distributed," Panda said, exhorting the industry to make the pie larger rather than "fleecing" business from competition.
Panda also asked the insurers to create grievance Redressal cells with a separate set of officials in place.
There is also a need for financial sector participants to work together synergistically for deepening the penetration.
Speaking at the same event, whole-time member of Pension Fund Regulatory and Development Authority Manoj Anand said there is a need for insurers to develop annuity plans which protect an individual from inflation risks.
He said the PFRDA expects Rs 11,000 crore to flow into annuity plans floated by insurers in the next five years after a holder reaches the retirement age.
At a time when a debate rages about states switching to the old pension scheme, Anand said the new pension scheme has been very beneficial for the sector.
The overall assets under the NPS had stood at Rs 8.53 lakh crore as of December 31, 2022 and are expected to grow to Rs 9.25 lakh crore by FY23 end, he said.
There is also a need to get gig workers under occupational pension plans, Anand said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)