{"id":37735,"date":"2025-02-20T19:19:40","date_gmt":"2025-02-20T13:49:40","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=37735"},"modified":"2025-03-01T18:35:30","modified_gmt":"2025-03-01T13:05:30","slug":"india-insurance-sector-review-committee","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/20-02-2025\/india-insurance-sector-review-committee","title":{"rendered":"Committee to Review India\u2019s Insurance Sector"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong><a href=\"https:\/\/www.nextias.com\/economic-survey\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/economic-survey\">Economic Survey 2025<\/a><\/strong> projecting the Insurance sector as the <strong>fastest-growing among G20 nations<\/strong>. However, certain challenges necessitate a <strong>comprehensive review<\/strong> of the sector.\n<ul class=\"wp-block-list\">\n<li>In response, the government has set up a <strong>Committee <\/strong>chaired by Dinesh Khara <strong>to Review the Insurance Sector<\/strong>, aiming to <strong>modernize regulations, enhance consumer protection, and boost investment<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background: The Evolution of India\u2019s Insurance Sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The insurance sector in India has evolved through various <strong>policy reforms and regulatory developments<\/strong>.<\/li>\n\n\n\n<li><strong>Key milestones<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>1938:<\/strong> The Insurance Act, 1938, was passed during British India to regulate the insurance sector. It provides the legal framework for the functioning of the insurance industry through IRDAI.\n<ul class=\"wp-block-list\">\n<li>The act defines types of insurance policies in India: life, general, and health insurance.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>1956<\/strong>: Life Insurance Corporation of India (LIC) was nationalized.<\/li>\n\n\n\n<li><strong>1972<\/strong>: General insurance was nationalized.<\/li>\n\n\n\n<li><strong>1999<\/strong>: The <strong><a href=\"https:\/\/www.nextias.com\/blog\/irdai\/\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/blog\/irdai\/\">Insurance Regulatory and Development Authority of India (IRDAI)<\/a><\/strong> was established, opening up the sector to private players.<\/li>\n\n\n\n<li><strong>2015<\/strong>: FDI limit increased to <strong>49%<\/strong> (later raised to <strong>74% in 2021<\/strong>).<\/li>\n\n\n\n<li><strong>2025 Economic Survey<\/strong>: Highlights the need for further reforms due to <strong>increased digitalization, rising risks, and global market trends<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Are Insurance Reforms Needed?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Low Insurance Penetration &amp; Density: Insurance penetration<\/strong> declined from <strong>4% in FY23 to 3.7% in FY24<\/strong>, below the global average.\n<ul class=\"wp-block-list\">\n<li><strong>Life insurance penetration<\/strong> dropped from <strong>3% to 2.8%<\/strong>, while <strong>non-life insurance<\/strong> remained at <strong>1%<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Regulatory Gaps &amp; Need for Simplification: Fragmented regulations<\/strong> across life, non-life, and health insurance.\n<ul class=\"wp-block-list\">\n<li>Need for <strong>faster claim settlements<\/strong>, improved <strong>consumer grievance redressal<\/strong>, and <strong>enhanced digital security<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Emerging Risks &amp; Cybersecurity Challenges: Climate change, geopolitical uncertainties, and cyber threats<\/strong> are <strong>reshaping risk management<\/strong>.\n<ul class=\"wp-block-list\">\n<li><strong>Digital fraud and misselling<\/strong> have emerged as major consumer concerns.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Boosting Innovation &amp; Investment: Technological advancements<\/strong> (AI, blockchain, and insurtech) require a <strong>regulatory framework<\/strong> that fosters innovation.\n<ul class=\"wp-block-list\">\n<li><strong>Foreign investments<\/strong> in the sector need further ease of regulations.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Expanding Rural &amp; MSME Coverage: Government schemes like PMFBY and Ayushman Bharat<\/strong> have expanded coverage, but <strong>private sector participation<\/strong> remains limited.\n<ul class=\"wp-block-list\">\n<li><strong>Microinsurance<\/strong> for MSMEs, gig workers, and rural communities needs <strong>customized policies<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regulatory Modernization: <\/strong>Streamline <strong>IRDAI guidelines<\/strong> for uniformity across sectors.\n<ul class=\"wp-block-list\">\n<li>Improve <strong>consumer protection laws<\/strong> for faster claim settlements.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Enhancing Insurance Penetration: <\/strong>Encourage <strong>new insurance products<\/strong> tailored for <strong>rural areas, MSMEs, and gig workers<\/strong>.\n<ul class=\"wp-block-list\">\n<li>Strengthen <strong>financial literacy programs<\/strong> to increase awareness.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Strengthening Cybersecurity &amp; Digital Oversight: <\/strong>Establish <strong>robust cybersecurity norms<\/strong> for digital insurance.\n<ul class=\"wp-block-list\">\n<li>Improve <strong>fraud detection<\/strong> using AI-driven solutions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Encouraging Insurtech &amp; Innovation: <\/strong>Simplify compliance for <strong>tech-driven insurance startups<\/strong>.\n<ul class=\"wp-block-list\">\n<li>Promote <strong>usage-based and AI-driven insurance models<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Attracting Investments &amp; Improving Market Competitiveness: <\/strong>Further <strong>liberalization of FDI policies<\/strong> to attract global players.\n<ul class=\"wp-block-list\">\n<li>Ensure a <strong>level playing field<\/strong> between public and private insurers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>Committee to Review the Insurance Sector<\/strong> marks a <strong>critical step in reforming India\u2019s insurance landscape<\/strong>. By focusing on <strong>regulatory simplification, financial inclusion, digital security, and innovation<\/strong>, India can <strong>unlock the full potential of its insurance market<\/strong> and ensure <strong>sustainable growth<\/strong> in the coming years.<\/li>\n<\/ul>\n\n\n\n<p>Source: TH<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Economic Survey 2025 projecting the Insurance sector as the fastest-growing among G20 nations. However, certain challenges necessitate a comprehensive review of the sector.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-37735","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=37735"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37735\/revisions"}],"predecessor-version":[{"id":38277,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37735\/revisions\/38277"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=37735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=37735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=37735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}