2018年-IMF国际货币组织全球_India_Financial_Sector_Assessment_Program_Insurance_Sector_Regulation_and_Supervision_38页_586kb

India: Technical Note on Insurance Sector Regulation and Supervision

Core Content Overview

This technical note, prepared by the International Monetary Fund (IMF) as part of the 2017 Financial Sector Assessment Program (FSAP) in India, evaluates the development of the Indian insurance sector and its regulatory and supervisory framework since the 2011 FSAP. It outlines key market and regulatory changes, challenges, and recommendations for further improvements.

Main Developments Since 2011

Market Structure and Performance

• The insurance sector has grown in scale and diversity, overcoming the adverse effects of the global financial crisis.
• Life insurance dominates the market, accounting for about 75% of total premiums, with a strong focus on savings and investment rather than protection.
• Non-life insurance is dominated by motor insurance, which accounts for ~45% of non-life premium income.
• Insurance penetration remains low, particularly in non-life, compared to comparator countries (e.g., Brazil, China), though the number of people insured is increasing due to government schemes.
• Penetration rates in 2015 were 2.72% for life, 0.72% for non-life, and 3.44% for total insurance, compared to global averages.

Distribution Channels

• Traditional channels still predominate, but online and point-of-sale distribution is growing.
• In life insurance, individual agents account for ~70% of individual business, while non-life relies more on brokers and direct sales (each ~25% of the market).
• Corporate agents, mainly banks, account for ~25% of life and ~7% of non-life sales.

Foreign Participation

• Foreign ownership in primary insurers increased to 49% from 26%.
• Foreign reinsurers can now operate as branches in India.
• Many private insurers are joint ventures with foreign firms, leveraging new legislative changes.

Solvency and Profitability

• The industry is generally profitable and solvency ratios exceed minimum requirements, though with significant exceptions.
• Life insurers had an average solvency ratio of 344% in 2016, while non-life and health combined had 239%.
• State-owned insurers often underperform, with some reporting solvency ratios below the minimum in 2016.

Key Risks and Challenges

• Life insurance faces risks related to market and mortality, but these are relatively well diversified.
• Non-life insurance is more exposed to short-term risks, with many lines being loss-making despite premium increases.
• Motor Third-Party Liability (MTPL) remains a major challenge due to fixed premiums, unlimited liability, and low penetration.
• Catastrophe risks are low but growing, especially from floods and weather events.
• Cyber risks are of interest but not yet widely covered.

Main Recommendations

High Priority

• IRDAI should formulate a strategy, plan, and timetable for modernizing the solvency framework.
• IRDAI should move to a more risk-based framework for supervision.
• IRDAI should review its resources and organizational structure to support a risk-based approach.

Medium Priority

• Review cross-border supervision and regulatory arrangements for foreign reinsurers.
• Consider extending the scope of financial conglomerate regulation through the FSDC and IRF.
• Review minimum investment requirements in infrastructure and housing to ensure alignment with regulatory goals.
• Continue reforms in the motor insurance market, including enforcing traffic laws and reducing unlimited liabilities.
• Level the playing field for private insurers by addressing structural advantages of public sector insurers.

Regulatory Architecture

• IRDAI is the sole national regulator, overseeing both regulation and development of the insurance sector, including policyholder protection.
• It is accountable to parliament through the Department of Financial Services.
• Functions include supervision of intermediaries, business conduct, and related areas like third-party administrators and insurance repositories.
• Staff size increased from 181 to 237 in 2017, but it is still under-resourced for its target onsite inspection frequency (1 per company every 1–2 years).
• IRDAI relies on deputation staff from public sector insurers (25% of its workforce).

Regulatory Reforms and Initiatives

• IRDAI has implemented new regulations to strengthen policyholder protection, including product regulations and controls on commissions and expenses.
• Investment regulations remain conservative, but there are unusual minimum requirements for infrastructure and housing.
• IFRS implementation from 2020–21 will require economic valuation of financial statements, and IRDAI is working on risk-based solvency and Own Risk and Solvency Assessment (ORSA).
• Modernization of solvency requirements is still pending, with IAIS Insurance Capital Standards being considered for adaptation to the Indian market.

Conclusion

The Indian insurance sector has made progress in regulation and supervision since 2011, with IRDAI implementing significant reforms. However, challenges remain, particularly in increasing insurance penetration, improving underwriting discipline, and addressing structural advantages of public sector insurers. The solvency framework needs modernization, and supervision should become more risk-based to support sustainable growth and better risk management. IRDAI is also advised to review its resources and organizational structure to meet these evolving demands.