India’s Insurance Sector In 2024:
A Year Of Transformation, Yet Full
Of Obstacles
In 2024, several changes to insurance products
have been implemented to benefit customers.
December 17, 2024, 12:10 IST
2024 has been a watershed year, driven by five key reforms that are set to reshape the
industry.
The insurance industry in India has experienced a significant
transformation in 2024, with key regulatory reforms, new product
innovations, and a continued drive toward increased accessibility
and customer-centricity. These changes have laid the foundation for
a more efficient, competitive, and inclusive insurance market, one
that promises to benefit both customers and insurers in the years to
come.
Pankaj Nawani, CEO of CarePal Secure and Rakesh Kumar, Founder
of Square Insurance share key observations from the insurance
sector in India.
:
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According to Pankaj Nawani, 2024 has been a watershed year, driven
by five key reforms that are set to reshape the industry:
1. Expenses of Management Regulations: Effective from April 1,
2024, the new guidelines by the Insurance Regulatory and
Development Authority of India (IRDAI) on expenses of
management, including commissions, have introduced clear
boundaries. This reform allows insurers to determine their
business sourcing strategies while ensuring that customer
:
benefits remain a priority. While this may favor larger,
established insurers initially, it could spur innovation among
smaller players who focus on product and distribution creativity.
2. Health Insurance Overhaul: Several changes to health
insurance products have been implemented to benefit
customers. These include faster claims approval processes
(within one hour), reduced moratorium periods for claims, and
the transfer of responsibility for managing claims across
multiple policies to insurers, relieving customers from
administrative burdens. Although these changes may cause
short-term disruptions in the industry, they are expected to
drive sustained growth by enhancing customer trust and
satisfaction.
3. GST Reductions on Insurance: The anticipated reduction of
the Goods and Services Tax (GST) on health and term insurance
policies is poised to make insurance more affordable for
customers. This reduction, though not yet implemented, is
expected to stimulate demand for insurance products, making
them more attractive to consumers.
4. Lower Surrender Charges for Life Insurance: In a bid to
protect customers from unfair financial penalties, the
government has significantly reduced surrender charges on life
insurance endowments. While this reform helps prevent the
mis-selling of policies, it also ensures that customers are not
burdened by excessive fees when they choose to exit early,
fostering a fairer and more transparent market.
5. 100% Foreign Direct Investment (FDI) in Insurance: After
nearly 25 years of gradual liberalization, the Indian government
has allowed 100% FDI in insurance companies. This bold move
is expected to attract foreign capital, bringing in innovation and
expertise that can drive the growth of the sector. It is also seen
as a crucial step towards achieving the government’s goal of
:
“insurance for all by 2047."
Challenges Remain For The Insurance Sector
However, despite these positive changes, challenges remain. Rakesh
Kumar, Founder of Square Insurance, points out that around 20% of
India’s rural population still lacks insurance coverage, especially in
health and life insurance. Factors such as limited awareness,
inadequate digital infrastructure, and a lack of trust in the system
continue to pose significant barriers to expanding insurance
coverage in rural areas.
Kumar advocates for a focus on accessibility and simplicity in 2025,
emphasizing the need for insurance products to be easier to
understand and claim. He calls for government policies to play a
pivotal role in creating frameworks that facilitate the adoption and
claims process, particularly in rural settings. Awareness campaigns,
leveraging mobile technology, and community outreach will be
crucial to educating the public on the importance of insurance.
As the insurance sector continues to evolve, it is clear that the
reforms of 2024 have set the stage for significant growth, provided
the challenges of accessibility and trust are addressed. The year
ahead holds promise for a more inclusive, customer-friendly
insurance market that could ultimately provide much-needed
protection to millions more Indians.
News business India’s Insurance Sector In 2024: A Year Of
Transformation, Yet Full Of Obstacles
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