Speaking at the meeting of board of directors of Irda, the finance minister said, The regulatory environment should be conducive to changes with regulator seeking broad guidelines as opposed to micro management.
He added there is a case for moving to a use and file system for approving products or mix it with the existing file and use policy, in order to speed up the product approval process which has been the concern in the sector for some time.
The finance minster has lauded some of the policy holders protection initiatives by Irda like dematerialized accounts, declining risk pool for third party motor pool, promotion of rural and social sector obligations and integrated grievance redressal mechanism.
He also said that the insurance sector has been an important contributor to the infrastructure development of the country and has invested R198,369 crore in the sector as on March 31, 2011. The bulk (about 78%) has come from public sector insurance companies.
The finance minister has said that while de-tariffing has resulted in significant lowering of premiums for the consumers, the adverse impact is being felt on the insurance companys balance sheet. Underwriting performance is the biggest driver of superior returns and is the key differentiator between the top performers and the rest. To ensure prudent underwriting and curbing unhealthy and suicidal competition among the companies through undercutting premiums is something that the regulator will need to address suitably, he said.
Mukherjee has also said that India has largely remained an under insured market with financial vulnerability across most of the income segments.
The protection level, as measured by level of sum insured to gross domestic product is at 55%, indicating the need for promoting long-term savings and protection.