New Delhi [India], February 18 : India's insurance sector has witnessed significant growth and development over the past few years with the domestic insurance market grown at a CAGR of 17 per cent over the last 2 decades and is expected to reach a size of USD 222 billion by 2026, according to Teamlease Regtech report.
However, with growth comes the burden of increasingly complex compliance obligations. A typical single-entity insurance company with a corporate office in a single state needs to deal with 2,236 unique compliances.
The annual compliance obligations rise to 4,638 once the frequency of compliances is factored in. The sector is governed by a variety of laws at the central, state, and municipal levels, resulting in hundreds of distinct compliance requirements annually.
The company must also obtain 38 licenses, permissions, and approvals under 27 acts. Key licenses required for the insurance business include approvals under various IRDAI regulations like IRDAI (Registration, Capital Structure, Transfer of Shares & Amalgamation of Insurers) Regulations, 2024, IRDAI (Registration of Corporate Agents) Regulations, 2015, IRDAI (Insurance Brokers) Regulations, 2018, etc.
Sandeep Agrawal, Co-Founder and Director, TeamLease RegTech, says, "The Indian insurance sector, driven by increased awareness, favorable regulatory changes, and enhanced private sector participation, has witnessed impressive growth over the last two decades."
He added, "The government's allowance of 100% Foreign Direct Investment (FDI) in the insurance sector would further accelerate growth, attracting significant foreign capital and boosting innovation. However, it is crucial to understand the complexities of compliance management that companies face in this space."
Tracking and managing all applicable regulatory obligations can be exceedingly difficult when done with Excel sheets that are dependent on people and done on an ad-hoc basis.
It recommendations compliance reforms like a strong compliance culture led by company leadership, technology-driven solutions to automate compliance processes, and implementing data security measures to build customer trust.
Further, regulators should consider introducing a single-window licensing framework to simplify approvals for insurers, encouraging RegTech adoption, and creating a centralized digital repository for regulations allowing companies to focus on growth and innovation.
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