Indian insurance sector is crying for reform 2.0 wherein the licence permit raj is abolished and the sectoral regulator is headed by a dynamic young person to increase the insurance penetration, said a senior industry official.
“For the first few years the IRDAI (Insurance Regulatory and Development Authority of India) was developing regulations. After that it is regulating the industry’s development,” P.S.Prabhakar, Senior Partner of the accounting firm Rajagopal & Badrinarayanan and a former insurance industry official told IANS.
After N.Rangachary, the first IRDAI Chairman, told IANS that it is time to do a review of IRDAI since it is more than two decades old, several senior industry officials have voiced their views to IANS.
“There should be a review committee to go into all regulatory aspects. It is time to see whether the original goal of forming the regulatory body has been fulfilled and if not, the action to be taken,” Rangachary suggested.
Industry officials also told IANS that IRDAI should not be a parking lot for retired bureaucrats as a post retirement perk.
The post of IRDAI Chairman has been lying vacant for the past couple of months and the need of the hour is to appoint a person who is young, dynamic and who can drive the industry forward.
“What kind of energy can a retired bureaucrat or an official from public sector insurance companies bring in? The financial services industry is changing fast. But the insurance regulator is still in the year 2000,” a CEO of an insurance company not wanting to be named told IANS.
According to the official, the PSU officials are adept to follow circulars but not chart out a new path for the sector.
“In the last 20 years the private sector has matured and there are enough insurance officials who have retired from there. They have grown their business. So, they should be appointed as IRDAI Chairman and Members to drive the industry so that insurance penetration increases,” the official added.
“There is nothing wrong in having a seasoned civil servant as the Chairperson of the Authority, who can bring to bear her/his unalloyed administrative capabilities, ably assisted by the full-time Members, who are from insurance background, viz., life, non-life, reinsurance and actuarial, which has been the case as of now,” D. Varadarajan, a Supreme Court lawyer specialising in Insurance and Corporate Laws and a Member on KPN Committee on Insurance Laws Reforms told IANS.
“In the past, the Government has also experimented with industry insiders as the Chairperson,” he added.
“However, in the selection of Members it has to be ensured that Membership of the Authority be not reduced to a ‘parking slot’ or ‘rehabilitation centre’ for industry discards, to avoid deleterious effects,” a senior industry official told IANS.
Industry officials also told IANS that the ease of doing insurance business in India is almost nil.
“Ease of doing insurance business in India? You must be joking. One should ask the industry players on how IRDAI is a control freak. The licence permit raj is in full force in the insurance sector,” a senior industry official preferring anonymity told IANS.
The IRDAI not only licences the insurers, intermediaries but also the outsourcing agencies like the healthcare claim processing companies.
“Only the hiring of security agencies, taxi operators and the caterers are not controlled by IRDAI,” sarcastically commented another senior industry official.
It takes ages for the regulator to give its nod for new products.
Industry officials also told IANS that the issue of licence for players is decided by former officials and there are no timelines laid for IRDAI to clear the applications.
It is said in its more than 20 years of existence there has been no vigilance probe registered against anyone in IRDAI.
“If IRDAI officials are honest then they should be nationally acknowledged and rewarded. If not, then the issues should be probed,” an IRDAI official told IANS.
According to the official, normally the Chief Vigilance Officer (CVO) should come from outside the organisation. But in the case of IRDAI, the position is manned internally.
To a query under the Right to Information (RTI) Act the IRDAI had replied that the approval of CVC (Chief Vigilance Commissioner) is not required for the appointment of its CVO.
(Venkatachari Jagannathan can be contacted at [email protected])
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