The Insurance Regulatory and Development Authority of India’s (IRDAI) consultation paper on distributor commissions is an unusually audacious attempt at a course correction in a sector that, despite years of regulatory intervention, continues to grapple with high costs, mis-selling, low persistency and inadequate value for policyholders.
Q: Two years out, at the end of your tenure, when the dust has settled, what would you want the insurance ecosystem to look like? Since this is a blueprint for the future and completely shakes up the status quo in the sector, are there some system-level goals you have in terms of penetration, new lives insured, persistency, claim settlement, etc.?
Ajay Seth: I want a market where customers make informed choices, rather than one where insurance is primarily push sold. As I said last October, health insurance is at an unstable equilibrium and life insurance at a low-efficiency equilibrium.
The aim is to move both to a sustainable, high-efficiency equilibrium: simpler products, transparent pricing, fairer distribution and stronger accountability, with insurers and distributors commercially viable.
We will track progress on the outcomes that matter to policyholders: wider coverage, better persistency, fewer complaints, fair and prompt claims, affordability and cost efficiency.