In a year marked by regulatory dynamism, 2023 witnessed pivotal changes in the Indian insurance sector, leaving a lasting impact on industry players. The Insurance Regulatory and Development Authority of India (IRDAI) took center stage, introducing significant amendments, including new rules for expenses of management and commission payments. These alterations aimed at fostering a more mature and adaptable industry environment by removing commission caps and implementing an overall limit on management expenses.
Casparus Kromhout, MD and CEO of Shriram Life Insurance, hailed the move, emphasizing its reflection of a more flexible industry ethos. Alongside commission adjustments, IRDAI initiated strategic plans with long-term implications for the sector. State-centric initiatives, such as the State Insurance Awareness plan, and upcoming projects like Bima Vistaar, Bima Vahak, and Bima Sugam, sought to enhance insurance accessibility and affordability by fostering collaboration among IRDAI, state officials, government authorities, and insurers.
The beginning of 2023 brought forth budgetary expectations from life and health insurers, including pleas for separate tax deductions, higher limits for health insurance premiums, and tax exemptions for annuity income. However, Finance Minister Nirmala Sitharaman’s announcement on February 1 delivered a blow to traditional endowment policies. The withdrawal of tax benefits on maturity proceeds for policies with premiums exceeding Rs 5 lakh dampened spirits among life insurers, though the impact on the Life Insurance Corporation of India (LIC) remained minimal.
The year also saw a push for higher surrender values for traditional insurance policies, with concerns raised by industry players regarding potential early exits. While the final regulations are expected in 2024, insurers are advocating for a cautious approach to prevent a surge in policyholder exits.
One of the highly anticipated events in 2024 is the rollout of Bima Sugam, hailed by IRDAI as a potential “UPI moment” for insurance. This tech-enabled platform aims to streamline policy comparisons, servicing, claim settlement, and grievance redressal, promising a unified experience for policyholders.
Insurers capitalized on the prevailing interest rate environment by launching guaranteed endowment plans. Simultaneously, the market witnessed the introduction of small- and mid-cap funds in Unit-Linked Insurance Plans (Ulips) to tap into the favorable market conditions.
The rising influence of InsurTech continued to reshape the industry, with insurers leveraging technology for enhanced policy sales, servicing, and claim settlement. Industry experts predict further technological integration in 2024, emphasizing the role of technology in customizing insurance products, utilizing data analytics, and improving overall customer experience.
On the health insurance front, policyholders faced higher premiums, attributed to increased claims, rising medical inflation, and the aftermath of the COVID-19 pandemic. Senior citizens bore the brunt of steeper premium hikes, prompting a call for dedicated healthcare funds to manage escalating medical expenses.
The insurer-hospital tussle remained a point of contention, prompting the General Insurance Council to take action against hospitals inflating treatment bills and engaging in fraud. The establishment of a committee, comprising insurers, hospitals, and experts, aimed to address grievances on both sides.
To enhance efficiency and customer satisfaction, IRDAI proposed a National Health Claims Exchange backed by the central government, fostering a common hospital network for insurers. These initiatives, set to materialize in 2024, hold the promise of transforming the insurance landscape and improving customer experiences.
