Over the last four years, the insurance industry has seen significant changes that will have a long-term impact on both life and non-life sectors.
Be it the jurisdictional spat with SEBI over unit-linked plans or the tight vigil over insurers in the forms of penalties or IPO norms and the cap on investments, the Insurance Regulatory and Development Authority (IRDA) has been on the move.
The moving force behind this frenetic pace of activity was its Chairman, J. Hari Narayan. A veteran IAS officer known for his strong views and passion to put the customer first, Hari Narayan spoke to
How do you sum up the insurance industry's growth in the last four years?
When I took over as Chairman of IRDA in June 2008, the non-life sector was very slow while in life insurance there was growth bubble. Things are different now. The non-life sector has no problem now, with key reforms such as dismantling of motor third party pool, and is growing at over 20 per cent. In life insurance, however, the growth declined. Now there are some positive aspects — there is healthy and robust growth, though not high in numerical terms right now. This will continue to grow. In non-life, I expect developments such as consolidation going forward.
Do you think the regulator has enough teeth and autonomy now?
IRDA is adequately empowered and has autonomy. However, the question is how you are going to use them or what you choose to do. The adequacy of intent and effort should match always.
What are the regulatory challenges you see in next five years?
As of now we are only dealing with fundamental challenges like pruning of product design and so on. But in future, there will be challenges of a higher order. There are risk-based solvency, development of analytical tools, and the modalities to simplify the wordings. Though I made a beginning on the last point, still there is a long way to go.
What do you feel about IRDA’s stand-off with SEBI over ULIPs about two years back? Do you agree that your policies were controversial?
I don’t say ‘controversial’ but, yes, IRDA policies in my term were fiercely debated. On the issue with SEBI, I think it has done good for all. It is always a good idea to have a difference and any conflict is good on ideological grounds because it makes you pause and think. Finally, it was not that we had a problem with SEBI at an individual level. We are all working for public welfare.
After the IRDA-SEBI issue, there has been a proposal for a single, unified financial regulator. What is the present status? What is your view on that?
I believe the Financial Sector Legislative Reforms Commission, which has been asked to look into the issue, is for a single regulator. But it is a bad idea as sectors require individual and specialised focus.
Are there any things which you could not do as a regulator?
I could not complete bancassurance (where the insurance company uses the bank sales channel in order to sell insurance products) reforms which is a very key area. I also wanted the analytics project to be completed. Made a good beginning, but it is now midway.
You are basically an administrator and not from the industry. Did it make your task difficult at IRDA?
No. There are always ways to learn and people to teach, and I learnt. One good thing about IAS officers is that we are good at grasping basics of anything quickly. It helped.
Do you think the IRDA chief should be chosen from the industry?
Strictly no. A wider view will always help. Further, the idea of a regulator is not for a specialist role. The IRDA also has a development role.
What are your plans after retirement?
I will simply retire.
naga.gunturi@thehindu.co.in