India’s Insurance industry is one of the premium sectors experiencing upward growth. This upward growth of the insurance industry can be attributed to growing incomes and increasing awareness in the industry. India is one of the top 10 largest non-life insurance market in the world’s emerging insurance markets, growing at a rate of 14-15% each year.
The insurance industry has undergone numerous transformations in terms of new developments, modified regulations, proposals for amendments and growth in the past few years.
To give a context, the Indian Insurance market has been till recently a tariffed market with more than 50% of the market being tariffed (PDBI, Construction All Risks, Motor and W.C.). The regulator has been working on easing the norms and ensure the financial stability of the Insurers by stressing on good governance, maintaining solvency margins, simplifying the wordings, better accessibility of products to customers and many other such focussed programs.
Last year the Regulator introduced partial de-tariffing of the pricing of Flexa perils by allowing certain discounts which was the first step of liberalizing the pricing part.
Now, in line with the changes proposed and implemented so far, the India Insurance Regulator (IRDAI) has issued a “notification” dated 20 Mar 2024, that the general regulations (other than those relating to premiums/ premium rating), terms, conditions, clauses, warranties, policy and endorsement wordings applicable to certain classes of business such as PDBI, Construction All Risks, Motor, Workmen’s Compensation and Marine under the relevant Tariffs, stand entirely de-notified and no longer in force effective 01.04.2024.
This means that Insurers will be able to design policy wordings and also price the products freely. Currently there is some guideline in place directed by the General Insurance council particularly for Act Of God perils. The impact of such notification on the minimum pricing on Act of God perils will be closely monitored by all stakeholders to see how the change progresses in terms of Natcat pricing.
The Regulator continues to demonstrate that it does not want to involve itself in the transactional side of Insurance business and will only confine their role to ensuring financial stability of the players and quality of the licences issued and renewed.
These developments have opened new avenues of growth for the industry while ensuring that insurers stay relevant with changing times and the latest digital disruptions.
Meantime, as per the guidelines of the regulator, the existing policies issued to all customers will continue to operate without any impact of this notification.
As we navigate through these changes, Peraj continues to endeavour to provide its colleagues and business partners with timely updates and any additional information necessary to ensure optimum coverage gets maintained for our Customers.
About the author – Tushar Thakker is the MD & CEO of Peraj Insurance Brokers Pvt Ltd, having more than 30 years’ experience in the Insurance Industry. Peraj is one of the oldest Insurance intermediary services company in India and also actively involved in International business since over 40 years.
