Corporate governance is must to achieve sustainable growth

"To achieve sustainable growth the insurance companies should look at their corporate governance standards to be fair, transparent, trustworthy and financially sound," according to Insurance Regulatory and Development Authority of India (IRDAI) chairman Dr Subhash Chandra Khuntia.

Dr Khuntia was addressing ‘FINCON 2019 - Going from teens to twenties’, the 20th annual insurance conference of the Federation of Indian Chambers of Commerce and Industry (FICCI) in Mumbai on 3 May.

“I suggest don’t be too bothered about improving your market share. The industry can achieve this by helping to increase the size of the market and provide protection to customers. If the growth is high, you don’t have to bother about market share,” he said.

Industry players should help increase the size of the market and provide the required protection to customers as this will improve the resilience of society.

If required, change course to ensure long term sustainability

Speaking about non-profitable companies, Dr Khuntia said they need to be introspective and “those struggling, will have to change course and see that long-term sustainability is ensured.”

Dr Khuntia said, “Moving ahead, IRDAI will be working on a risk-based capital framework, risk-based  supervisory framework and the introduction of IFRS17.”

Introduction of IFRS 17 has been postponed until 2022 globally, however, IRDAI wants the industry to support the regulator during the preparatory phase.

Self-regulation should be adopted

“I am not in favour of unnecessary controls but would like to have broad regulations and, within that, self-regulation on your part,” said Dr Khuntia.

He said IRDAI was looking forward to industry feedback on the proposed regulatory sandbox guidelines issued in February this year.

The regulator had invited suggestions and comments on the proposed regulatory sandbox approach, which facilitates innovations in the insurance sector, makes insurance products more affordable and relevant for the insured and above all gives a fillip to insurance penetration.

Provision for defaults by debt-ridden non-banking finance companies

Speaking to reporters on the sidelines of FINCON 2019, Mr Khuntia said, “Insurers can make full provisions for bad debts of defaults by debt-ridden infrastructure leasing and financial services and its entities, as well as the two units of Reliance Capital that were downgraded recently.

“Insurers should use their own judgement and not just depend on credit rating agencies while making investments,” said Dr Khuntia.