Summary - IRDAI -

Annual Report 2022-23

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Indian Insurance in the Global Scenario

In 2022, India was ranked as 10th largest insurance market in the world with a premium volume
of 131 billion (with 1.9 per cent share USD in global insurance premium) and it is projected to
become the sixth largest by the year 2032 as India's insurance market is one of the fastest
growing insurance markets in the world. The growth outlook for India is based on strong
economic growth, rising disposable incomes, a young population, increased risk awareness,
digital penetration, and regulatory developments.

Insurance Penetration and Density

Insurance penetration and density are two metrics,

among others, often used to assess the level of
development of the insurance sector in a country.
While insurance penetration is measured as the
percentage of insurance premiums to, insurance
density is calculated GDP as the ratio of premium to
population (per capita premium).

As per Swiss Re Sigma Report, the insurance

penetration of Life Insurance sector in India is
reduced from 3.2 per cent in 2021-22 to 3 per cent in
2022-23 and the same for Non-Life Insurance sector
remained at 1 per cent in both these years. As such,
India's overall insurance penetration reduced to 4 per
cent in 2022-23 from the level of 4.2 per cent in 2021-
22.

In 2022-23, the life insurance density increased to 70 from 69 in 2021-22. Whereas, non-life
insurance density remained stable. In 2022-23, the insurance density in India incresed from USD
91 in 2021-22 to USD 92 in 2022-23.

As per Swiss Re Sigma World Insurance Report, globally insurance penetration and density were
2.8 per cent and USD 354 for the life segment and 4 per cent and USD 499 for the Non- life
segment. Overall, insurance penetration and density were 6.8 per cent and 853 USD respectively
in 2022.

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Appraisal Of Indian Insurance Market

Business Performance of Life Insurance Sector

The Life Insurance market in India has recorded a consistent premium growth over the years.
During 2022-23, the Life insurance industry recorded premium income of 7.83 lakh crore
registering 12.98 per cent growth. The private sector life insurers have clocked a growth of 16.34
per cent in premiums, while the public sector life insurer recorded 10.90 per cent growth in
premium.

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Renewal premium continues to contribute majority of total premium underwritten by Life
insurers in 2022-23 at 52.56 per cent. The balance 47.44 per cent is contributed by the new
business premium. Single premium products continue to play a major role for public sector with
a contribution of 40.65 per cent of its total premium while it was 22.20 per cent for private life
insurers.

Life Insurance Corporation of India (LIC ) is the only life insurer underwriting business outside of
India and collected a total premium of 404.78 crore during 2022-23.

During 2022-23, life insurers issued 284.70 lakh new policies under individual business, out of
which the public sector insurer issued 204.29 lakh policies (71.75 per cent) and the private life
insurers issued 80.42 lakh policies (28.25 per cent). The private sector insurers registered a
growth of 8.76 per cent, the public sector insurer registered a de-growth of 5.94 per cent and
the Industry registered a de-growth of 2.21 per cent in the number of new policies issued against
the previous year

Business Performance of General, Health and Specialised Insurers

During 2022-23, the non-life insurance industry underwrote a total direct premium of Rs. 2.57
lakh crore in India registering a growth of 16.40 per cent from previous year. Out of which, 27
private sector insurers (including standalone health insurers) have underwritten 1.58 lakh crore
rupees as against Rs. 1.30 lakh crore in 2021-22. The specialized insurers underwrote gross
direct premium amounting to Rs.15,818 crore. The public sector general insurers together
contributed to 38.42 per cent of the market share while the private sector general insurers
contributed to the remaining 61.58 per cent.

Three public sector insurers except United India are underwriting general insurance business
outside India. The total premium underwritten outside the country by the three public sector
insurers stood at Rs.3,434 crore in 2022-23 as against Rs.3,303 crore in 2021-22 registering a
growth of 3.96 percent.

Among various segments under non-life insurance business, health insurance business is the
largest segment with a contribution of 38.02 percent (36.48 percent in 2021-22) of the total
premium. Health Insurance Segment reported growth of 21.32 percent (26.27 percent growth
in 2021-22) with the premium amounting to Rs. 97,633 crore from 80,502 crore in 2021-22. The
Motor segment witnessed a year-on-year growth of 15.40 percent with premium collection
amounted to 81,280 crore in 2022-23 from Rs. 70,433 crore of 2021-22. However, the share of
the Motor segment in the total premium slightly decreased to 31.64 percent from 31.91 percent
of previous year. The premium collection in fire segment increased by 11.07 percent to Rs.
23,936 crore and in Marine segments increased by 21.38 per cent to 5,059 crore in 2022-23.

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The non-life insurers have issued 30.18 crore policies in the year 2022-23 reporting an increase
of 13.60 percent.

As of March 31, 2023, the combined paid-up capital of all non-life insurers amounted to 40,375
crore, an increase from the previous year's amount of 37,855 crore. Over the course of 2022-
23, general and health insurers added Rs. 2,520 crore to their equity capital base. Private sector
general insurers alone infused 1,691 crore in 2022-23, while standalone health insurers and
specialized insurers injected capital amounts of 441 crore and 388 crore, respectively .

During the year 2022-23, none of the public sector general insurers paid dividends. However,
seven private sector general insurers paid dividends with total amounting to Rs. 1,166.20 crore.
None of the stand-alone health insurers paid dividends in both 2022-23 and 2021-22. AIC of
India Ltd paid 40 crore dividend in 2022-23.

Claims of General Insurers, Health Insurers and Specialised Insurers:

During 2022-23, the aggregate net incurred claims reported an increase by 6.22 per cent over
the previous year amounted to Rs. 1,49,313 crore ( 1,40,566 crore during previous year),
Separately, the public sector general insurers, private sector general insurers and standalone
health insurers reported an increase in the incurred claims amount of 3.91 per cent, 14.20 per
cent and 0.54 per cent respectively, while the specialized insurers reported a decrease of 20.52
per cent.

The incurred claims ratio (net incurred claims to net earned premium) of the non-life insurance
industry was 82.95 per cent during 2022-23 against 89.08 per cent of previous year. The
incurred claims ratio for public sector insurers was 99.02 per cent for the year 2022-23 as against
the previous year's incurred claims ratio of 103.17 percent. Whereas for the private sector
general insurers, standalone health insurers and specialized insurers have improved ICR with
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75.13 per cent, 61.44 per cent and 73.71 per cent respectively for the year 2022-23 as compared
to the previous year's ratio of 77.95 per cent, 79.06 per cent and 92.47 per cent respectively

IRDAI has implemented a significant change in the product filing process for non-life insurers
during the financial year 2022-23. The transition is from the traditional "File & Use" procedure
(which requires approval from IRDAI before launch) to the "Use & File" procedure (where
products can be launched without prior approval). This change has been made to assist general
insurers in designing and promptly launching new and innovative products that align with to the
market requirements and better serve the policyholders, thereby furthering the insurance
penetration in India. This initiative facilitates ease of doing business by enabling the insurers to
quickly launch the products or modify the products as per the emerging needs of the market
and policyholders.

Subsequently, the general Insurers were allowed to file all products under Miscellaneous lines
of business (including modifications of current products) under U&F procedure for both retail

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and commercial categories. The documents that are required to be submitted under the above-
mentioned U&F circulars shall hereafter be submitted to the Product Management Committee
( PMC ), instead of being filed with IRDAI. The PMC shall be responsible for the final approval of
the products.

IRDAI may call for documents in respect of a few products identified on monthly basis and
insurer shall submit the entire set of documents to , whenever called for, IRDAI within a period
of 2 days.

It is envisaged that the above initiatives will enable the insurance industry in launching
customized and innovative products in a timely manner in order to address the dynamic needs
of the market, which will further help in making insurance inclusive and enhancing insurance
penetration in India.

Number and Details of Authorized Insurers/Re-

Insurers

As of March 31, 2023, the insurance sector in India

comprises a total of 55 insurers,1 reinsurer, 2
specialized insurers and 11 FRBs. Among 55
insurers, there are 25 life insurers, 25 general
insurers, and 5 stand-alone health insurers.

Policies and Measures to Develop Insurance Market

IRDAI is on a mission to revamp and reform the insurance sector in the country and increase
penetration. The primary objective of these efforts is to enhance availability, accessibility, and
affordability of insurance for all citizens and businesses. Towards this objective, IRDAI has taken
various steps to promote healthy growth of the insurance industry, rationalise the regulatory
framework, and reduce the compliance burden of regulated entities. The reforms focussed on
facilitating product launches, flexible capital raising, efficient management of expenses,
expanding distribution channels, enhancing reinsurance accessibility and facilitating entry of
new players. IRDAI, during 2022-23, has implemented the following important regulatory
measures: -

I. Entry of new players into the insurance sector made easy: A Single Window NOC Portal
(www.noc.irdai.gov.in) was launched to facilitate the incorporation of an insurer by
making the NOC available in a hassle-free and timely manner
II. Quick launch of Insurance Products: Insurers can now launch all Health & General
Insurance products, as well as the majority of Life Insurance products, without seeking

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 prior approval from IRDAI , thereby reducing the time taken to launch a new product in
the market.
III. Ease of doing business: IRDAI has taken several actions to lessen the burden of
compliance. In this direction, so far, 70 returns have been rationalised, and about 167
circulars have been repealed while dispensing with the prior approval requirements in
certain identified areas.
IV. Addressing dynamic needs of the industry: IRDAI has facilitated various measures as
per the evolving needs of the sector, such as Tech-based add-ons (General insurers have
been permitted to introduce tech-enabled concepts for Motor Insurance such as Pay
as You Drive, Pay How You Drive, etc.), expansion in the scope of the cashless facility in
health insurance, Innovative products in Fire Insurance, Ease of living for Senior Citizen.

In addition to above, IRDAI has brought in following key changes in the regulatory framework
to promote ease of doing business and reduction in compliance burden: -

1) The (Registration of Indian Insurance Companies) Regulations, 2022 IRDAI introduced

flexibility for insurers by making Special Purpose Vehicle ( SPV) investments optional for
Private Equity ( PE). It also raised the individual investment limit, allowed subsidiary
companies to promote insurers with conditions, permitted promoters to dilute their
stake, included 'fit and proper' criteria, and specified lock-in periods based on an
insurer's age.
2) IRDAI (Assets, Liabilities and Solvency Margin of General Insurance Business)
Regulations, 2022- With a view to increase crop insurance penetration and efficient use
of capital by general insurers, the period for considering State/ Central Government
premium dues for calculation of solvency margin has been increased from 180 days to
365 days. Solvency factor related to crop insurance reduced to 0.50 from 0.70.
3) IRDAI (Actuarial report and Abstract for Life Insurance Business) (Amendment)
Regulations, 2022- In order to enable efficient utilization of capital by life insurers, the
factors for calculation of solvency has been reduced for Unit Linked Business (Without
Guarantees) from 0.80 per cent to 0.60 per cent and for Pradhan Mantri Jeevan Jyoti
Bima Yojana ( PMJJBY) from 0.10 per cent to 0.05 per cent
4) IRDAI ( O t h e r F o r m s o f C a p i t a l ) Regulations, 2022 - Requirement of prior approval
from for raising other IRDAI forms of capital (viz., subordinated debt and/or preference
shares) has been dispensed with to meet the dynamic capital needs. The threshold for
raising such capital has been increased to 50 per cent from 25 per cent of the paid up
capital & premium subject to 50 per cent of the Net worth of the company.
5) IRDAI ( R e g u l a t o r y S a n d b o x ) (Amendment) Regulations, 2022, allowed the
insurers/intermediaries to do experimentation on an ongoing basis by increasing the
experimentation period from '6 months' to 'upto 36 months' and moving from batch-
wise (cohort approach) clearances/approvals to clearances/approvals on a continuous

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 basis. A provision for review of rejected applications under sandbox has also been
introduced as part of amendments.
6) The ( IRDAI Insurance Intermediaries) (Amendment) Regulations, 2022, aimed to expand
choices and access to insurance through various distribution channels. The maximum
number of tie ups for Corporate Agents (CA ) and Insurance Marketing Firms (IMF ) have
been increased. Now, a can tie up with CA 9 insurers (earlier 3 insurers) and can IMF
tie up with 6 insurers (earlier 2 insurers) in each line of business of life, general and
health for distribution of their insurance products. The area of operation of has IMF also
been expanded to cover entire state (earlier district level) in which they are registered.
7) Amendments to Investment Norms: Allowed increased investment in the BFSI sector
from 25% to 30% to align with benchmark indices, flexibility in dividend eligibility criteria
for insurers' investments in preference and equity shares and allowed more investments
by life insurers in Mutual Funds and Real Estate Investment Trusts (REIT s)/Infrastructure
Investment Trusts (INVIT s). These changes aimed to encourage more investments in
housing and infrastructure sectors.
8) The concept of 'Trinity of Bima Sugam, Bima Vahak and Bima Vistaar' is being worked
out towards reaching the last mile, leveraging technology, community centric
intermediaries and simplicity of the products to ensure universal coverage. The Bima
Sugam is a unique platform integrated with India Stack, expected to provide end to end
solution for purchase, service and settlement of policies, thereby democratizing and
universalizing insurance. Bima Vahak is aimed to be a tech led women centric
distribution force. Bima Vistaar is a multiline product (life, health, property &
belongings) with parametric insurance solutions.
9) Towards reaching the last mile, during FY 2022-23, IRDAI introduced State Insurance Plan
as the core framework to enhance the insurance penetration by engaging state
governments and other regulatory agencies. Under this plan, Lead insurers accompanied
by other insurers are encouraged to work to deepen insurance coverage and penetration
in each of the states.
10) As part of collaborative and consultative approach, periodical meetings, 'Bima Manthan'
are conducted with the CEOs of insurance and reinsurance companies. Important
matters relating to the insurance sector are deliberated in these meetings.

Surety Insurance
Industries such as infrastructure require to submit bank guarantees for bid security and
performance guarantees prior to execution of projects. In order to obtain bank guarantees, the
concessionaires are required to provide sufficient collateral to the banks and required to pay
the bank charges for guarantee. As a result of which a significant amount of assets is being held
up as collaterals thereby creating, in certain cases, a liquidity crunch for execution of projects
by these concessionaires. Cost of bank guarantees, requirement of providing collaterals, non-
availability of bank guarantees and also to augment the growing needs of infrastructure sector

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under the National Infrastructure Pipeline, necessitated the need to look for an alternative to
bank guarantees for bid security and performance guarantees. In the search for an alternative
arrangement, Surety Bonds have emerged as better replacements for bank guarantees.

Surety insurance (or Surety Bond) is historically recognized world over as an alternative to bank
guarantee by providing guarantee against the performance obligations of a contractor in
execution of a project. Surety Bonds are widely prevalent in countries such as, Canada, Brazil,
US Mexico, Germany, Australia and Philippines. In India Legal/ Regulatory framework did not
permit Surety Bonds as they were treated as financial instruments and non-conventional
insurance products.

Considering proposals from various stakeholders such as National Highways Authority of

India(NHAI) supported by the Ministry of Road Transport and Highways (MoRTH ), IRDAI
constituted a working group. After examination of the recommendations of the Working Group,
the IRDAI notified (Surety Insurance Contracts) Guidelines, 2022 on 3rd January, 2022 setting
the stage for Surety Insurance Business in the Country.

The Working Group submitted its report dated 30 September, 2020 with recommendations on

• R e g u l a t o r y f r a m ew o r k – S e p a r a t e Guidelines on Surety Insurance business with

special focus on capital requirement, limit on exposure and risk assessment mechanism
• Underwriting Philosophy of the insurance companies
• Reinsurance Capacity
• Additional Legal framework and Ecosystem necessary for Surety market in India
• Partnership approach with Banks for sharing of risk and/or for sharing risk information
• off e r i n g o f S u r e t y B o n d s o n l y t o Construction Companies
• Issue of Other types of Surety bonds such as customs or tax bonds, Court Bonds etc.
• Centralized Data Base of the bonds issued
• R e g i s t ra t i o n a s G e n e ra l /s p e c i a l i s t insurance company to carryout Surety
Insurance Business in India.

The guidelines came into force with effect from 1st April, 2022 specifying various requirements
for launching/introducing Surety Insurance Product by insurers catering to the needs of
infrastructure projects to begin with.

Subsequently, proposals from various entities/regulatory bodies were received expressing the
need for expanding the scope for Surety Insurance in commercial lines also. The proposal from
Warehouse Development and Regulatory Authority (WDRA ) is one such kind, requesting to
facilitate surety bonds for its IRDAI registered warehouses.

Meanwhile, recognizing the increasing demand from various project owners, contractors and
other commercial entities, IRDAI permitted Insurers to service all commercial surety and
contract surety requirements and removed the premium cap to overall in case of mono-line

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surety insurers. Further, relaxed the restrictions such as higher solvency margin and
confinement of surety bond value to 30% of contract value, which will help the insurance
companies in designing surety-based insurance solutions to cater to the requirements of
entities/regulatory bodies such as WDRA .

INSURTECH INITIATIVES
1) BIMA Sugam

BIMA Sugam, is an electronic/digital insurance market place, which would enable and empower
all insurance stakeholders across the insurance value chain. The main objectives of BIMA Sugam
is

(i) Act as a single window for the policyholder to manage his/her insurance coverage;
(ii) End-to end solutions for customers' insurance needs i.e., purchase, service, and
settlement in a seamless manner;
(iii) Facilitate Insurance companies to access the validated and authentic data from
various touch points on a real-time basis;
(iv) Interface for the Intermediaries/Agents to sell policies and provide services to
policyholders. This initiative is a step towards achieving the vision of “Insurance for
All by 2047”.

2. IRDAI Hackathon

IRDAI organized its first hackathon with the theme 'Innovation in Insurance'. The hackathon
invited participants to identify and develop solutions that have the potential to make the
insurance available to every individual in a seamless and swift manner with the use of
technology and protecting the interests of the policyholders. The solutions were invited in the
areas of

(i) Automated Death Claim settlement using technology

(ii) Tech-based solution to curtail miss-selling of Insurance products;
(iii) Tech enabled solution to identify uninsured motor vehicles and ensure issuance of
mandatory Motor Third Party Insurance;
(iv) Technology based distribution of insurance products including micro insurance in
“difficult terrains and less penetrable areas”; and
(v) Fraud mitigation/prevention in motor insurance by using technology

Protection of Interests of Policyholders

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In order to provide a channel to receive grievances against insurers, has set up IRDAI Grievance
Call Centre (IGCC ). IRDAI has also put in place the Bima Bharosa portal as an online system for
grievance management that is not only a gateway for registering and tracking grievances online
but also acts as an industrywide grievance repository for to monitor IRDAI disposal of grievances
by insurers. The total number of grievances registered against life insurers was reduced by
about 17.73 per cent in 2022-23 from previous year and the ratio of total Unfair Business
Practices grievances to new policies issued remained at 0.09 per cent in 2022-23.

Insurers have been advised to take up the issue of mis-selling seriously by doing a root cause
analysis to identify the major causes. Some of them are to ascertain the suitability of the
product, place controls on various channels based on the vulnerability of the channel and have
a strategy on dealing with complaints of mis-selling.

Consumer Education

The definitive way of reducing mis-selling is to make the members of the public aware of the
concept of insurance, kinds of insurance policies, risks covered, benefits offered, exclusions, and
conditions etc. This is sought to be achieved through various efforts of financial education to
improve financial literacy.

Implementation of National Strategy for Financial Education

IRDAI continues to play an active role as a Member of the Core Committee of the National
Centre for Financial Education ( NCFE), an institution comprising representatives of all the
financial sector regulators in India with an aim to implement the National Strategy for Financial
Education (NSFE ) 2019-2024. The present chair of NCFE is being honoured by Executive
Director, IRDAI . NCFE in coordination with has conducted One-Day Principals' conclave with the
theme 'Integration of Financial Education in school curriculum'

Maintenance of Solvency Margin of Insurers

Every insurer and reinsurer shall at all times maintain an excess of value of assets over the
amount of liabilities of, not less than fifty per cent of the amount of minimum capital as stated
under Section 6 of the Insurance Act, 1938.

At the end of March 2023, all the life insurers complied with the stipulated solvency ratio of 1.5.
General Insurance Corporation of India ( Re) GIC reported a solvency ratio of 2.61 as on 31
March 2023. All Foreign Reinsurance Branches have reported solvency ratio above 1.5 as on
31st March , 2023.

Monitoring of Reinsurance:

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As at 31 March, 2023, there is only one Indian Reinsurer registered with IRDAI , namely General
Insurance Corporation of India (GIC Re). GIC Re has been providing reinsurance support to direct
insurers in India and foreign Insurers/reinsurers. GIC Re is managing the Nuclear Pool, Terrorism
Pool and Marine Cargo Excluded Territories Pool ( MCET Pool). As sole Indian Reinsurer, GIC Re
receives obligatory cessions on each and every policy issued by domestic general insurers
subject to certain limits and leads most of the treaty programs and facultative programs of these
insurers. This obligatory cession for 2022- 23 is four percent.

With the view to make India a Reinsurance hub, the Insurance Law (Amendment) Act, 2015 has
allowed Foreign Reinsurers and the Society of Lloyd's to open their Branches in India to transact
reinsurance business in India. The FRBs have to adhere to IRDAI (Registration and Operations of
Branch Offices of foreign reinsurers other than Lloyd's) Regulations, 2015 & Lloyd's and its
service companies have to adhere with (Lloyd's IRDAI India) Regulations, 2016 and any other
circulars/guidelines issued by from time to
IRDAI time. As on 31st March, 2023, there
are eleven Foreign Reinsurance Branches
(FRBs) including Lloyd's operating in India.
Lloyd's India is operating through one
Service Company.

Cross Border Reinsurers

“Cross Border Reinsurers” (CBR ) are the reinsurers, who do not have any physical presence in
India but carry on reinsurance business with Indian insurers. The Cross Border Reinsurers (CBR
s) play a significant role in reinsurance market in providing reinsurance support/capacity to the
Insurers. The ceding insurers have to ensure that CBRs meet the necessary qualifying criteria as
per IRDAI (Reinsurance) Regulations, 2018 and have File Reference Number (FRN ) issued by
IRDAI, before placing any business with them.

Terrorism Risk Pool

The Indian Market Terrorism Risk Insurance Pool ( IMTRIP) was formed with the initiative of all
non-life insurers in India in April 2002, after terrorism cover was withdrawn by international
reinsurers post 9/11 incident. The pool is administered by Re. The Pool provides GIC support to
insurance of terrorism risks covered under property insurance policies, including cover to
dwellings and fixed assets in multiple locations. The Pool's premium income for 2022- 23 was
1,809 crore as against 1,226.80 crore in 2021-22. The claims paid by the Pool during 2022-23
were 2.10 crore

Nuclear Insurance Pool

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The enactment of Civil Liability for Nuclear Damage Act, 2010 mandates protection of unknown
and potentially catastrophic risk arising out of nuclear events. Generally, nuclear perils are
excluded from conventional insurance covers as it requires a large insurance capacity.
Therefore, to protect the liability arising out of nuclear perils, Indian Nuclear Insurance Pool (
INIP) was formed in 2015 which is also managed by GIC Re. The pool provides coverage to
nuclear operators in the country and also to suppliers. The Pool's premium income for 2022-23
has been same as that of previous year i.e. Rs.103.50 crore. No claim has been paid by the pool
during the year 2022-23

Marine Cargo Excluded Territories Pool (MCET Pool)

Pursuant to the Russia-Ukraine war, international sanctions were imposed on doing business
with Russia. Due to the same, reinsurance capacity was not available for Marine Cargo
shipments of fertilizers and other commodities for Indian Insured's from the territories of the
Republic of Belarus, Ukraine and/or the Russian Federation (called as 'Excluded Territories').
Hence, to address the issue, Marine Cargo Excluded Territories Pool ( MCET Pool) was formed
in the year 2022 with the initiative of the General Insurance Council and the pool is managed by
GIC Re. The main objectives of the Pool are to enable pool members to provide insurance cover
for Marine Cargo shipments of fertilizers imports and exports only for Indian Insured's from
Excluded Territories and to cover other commodities for Indian Insureds as may be required and
with rates/terms to be agreed in consultation with the Underwriting Committee of the Pool.
The Pool's premium income for 2022- 23 was 26.59 crore. No claim has been paid by the pool
during the year 2022-23.

• As on March 31, 2023, General insurers and Reinsurers have invested 2.87 lakh crore (52.99
per cent) majorly in Central, State Government and other approved securities and 1.20 lakh
crore (22.15 per cent) in Approved Investments.

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During 2022-23, General and Health Insurers have settled 2.36 crore number of health insurance
claims and paid 70,930 crore towards settlement of health insurance claims. The average
amount paid per claim was 30,087. In terms of number of claims settled, 75 per cent of the
claims were settled through TPAs and the balance 25 per cent of the claims were settled through
in-house mechanism. In terms of mode of settlement of claims, 56 per cent of total number of
claims were settled through cashless mode and another 42 per cent through reimbursement
mode. Insurers have settled two per cent of their claims amount through "both cashless and
reimbursement mode"

Health Insurance Business Underwritten Outside India

Public sector general insurers namely New India, National and Oriental Insurance are doing
health insurance business in foreign countries. During 2022-23, they procured gross premium
of 263 crore from health, and travel PA insurance and have covered 11.47 lakh lives.

Regulation of Insurance and Reinsurance Companies

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During the year 2022-23, has brought in IRDAI several regulatory reforms to facilitate the orderly
growth and development of the insurance industry. The “sunset clause” has been incorporated
in the regulations to ensure timely review of the regulations to address the market dynamics.

IRDAI (Regulatory Sandbox) (Amendment) Regulations 2022

The Regulatory sandbox is a framework which provides a testing environment to the companies
to enable them to test their innovative products, technologies, etc., in a controlled regulatory
setting. It promotes innovation and technological solutions in the industry. Certain amendments
were also carried out in the Regulatory Sandbox Regulations to allow the
insurers/intermediaries to do experimentation on an ongoing basis by increasing the
experimentation period from '6 months' to 'up to 36 months' and moving from the existing
batch-wise (cohort approach) clearances/approvals to clearances/approvals on a continuous
basis. A provision for review of rejected applications under sandbox has also been introduced
as part of amendments.

IRDAI (Other Forms of Capital) Regulations, 2022

The IRDAI notified (Other Forms of Capital) IRDAI Regulations, 2022 and superseded the IRDAI
(Other Forms of Capital) Regulations, 2015. Major changes of the Regulations are as follows:

• The process relating to obtaining prior approval of the IRDAI for issue of other forms of
capital (OFC ) is discontinued to promote ease of doing business.
• Limit specified for issuance of OFC is revised. The new limit states that the OFC of the insurer
shall be lower of the following, at any point in time:
(i) 50 per cent of the total paid up equity share capital and securities premium of an
Insurer;
(ii) 50 per cent of the net worth of the insurer.

The limits will enhance the eligibility limit of OFC for the insurer, which will enable them to raise
additional capital.

• As the requirement for obtaining prior approval of the IRDAI is discontinued, regulation 4
on “Conditions for issue of Other forms of Capital” specifies the conditions subject to which
insurer can issue .
• The Insurers may exercise call option without seeking prior approval of the IRDAI, provided
that after exercising such call option, the insurer's solvency position would be at least 20 per
cent more than the control level of solvency.
• New regulation on “Responsibility of the Board” is inserted incorporating the following
provisions:
➢ For issuance of preference shares, Board resolution and special resolution shall be
passed in the general body meeting of the shareholders authorizing the issue of such
preference shares;

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 ➢ For issue of the debentures and any other debt instrument, a Board resolution shall be
passed authorizing the issue of such debentures and any other debt instrument;
➢ The Board shall provide rationale for issue of instead of equity share capital.

IRDAI (Registration of Indian Insurance Companies) Regulations, 2022

The IRDAI has notified (Registration of IRDAI Indian Insurance Companies) Regulations, 2022
which superseded (Registration of Indian Insurance Companies) Regulation, 2000. Major
changes of the Regulations are as follows:

A. Definition of “foreign promoter” has been added.

B. Non-Operative Financial Holding Company registered with can be Indian Promoter. RBI
C. Subsidiary company is allowed to be promoter if it is listed, has net worth of 500 crores
and has independent source of funds.
D. Process of registration of insurance company like NOC, validity period specified
E. Changes in criteria for investment by PE Funds
F. Promoter being the Special Purpose Vehicle (SPV ) conditions are specified.
G. Lock-in period for promoter and investor has been specified.
H. Increase in limit as investor: 10 per cent to 25 per cent (2 in each class)
I. Minimum promoter holding: above 50 per cent of equity (26 per cent: If listed + solvency
track record)

The above amendments will enable more players into the Insurance sector to provide more
choice to the policyholders. Further, it would help increase in foreign investments in insurance
sector. The fast track online process of obtaining NOC from IRDAI enables the applicants to
establish the Insurance company in a speedy manner. Further, regulations relating to transfer
of shares has been subsumed with these Registration regulations.

IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2022

The amendments in (Registration of IRDAI Corporate Agents) Regulations, 2015 and IRDAI
(Registration of Insurance Marketing Firm) Regulations, 2015 were brought as an amendment
under IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2022 dated 5 December,
2022.

The objectives of these amendments are to enable the policyholders/prospects to have wider
choice and access to insurance through various distribution channels and facilitate the reach of
insurance to the last mile. Accordingly, the maximum number of tie ups for Corporate Agents (
CA) and Insurance Marketing Firms ( IMF) have been increased. Now, a can tie up with 9 CA
insurers (earlier 3 insurers) and can tie up IMF with 6 insurers (earlier 2 insurers) in each line of
business of life, general and health for distribution of their insurance products. The area of
operation of IMF has also been expanded to cover entire state in which they are registered.

Insurance Brokers

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The number of registered brokers is 790 as on March 31, 2023. Out of this, the valid brokers
stood at 616 and remaining 174 are not in force as on March 31, 2023. The 616 valid brokers
comprise of 546 direct brokers, 66 composite brokers and 4 reinsurance brokers. Total 81 new
Certificate of Registrations (CoR) were issued during the period from April 01, 2022 to March
31, 2023 out of which 68 were direct insurance brokers (Life & General) and 13 direct insurance
brokers (General). During the period, 128 insurance broker registrations were renewed.

Micro Insurance Agents

In order to equip low-income groups and economically disadvantaged sections, micro insurance
as a concept had been brought in the form of affordable insurance products to help them cope
with and recover from financial losses. Initially had notified the Micro Insurance IRDAI
Regulations in 2005 and later on modified IRDAI (Micro Insurance) Regulations in 2015
permitting many banking and non-banking financial institutions, cooperative societies to be
appointed as Micro Insurance agents.

Micro Insurance in Life Insurance Sector

Forty-two (42) micro insurance products of 20 life insurers were available in the market for sale
as at March 31, 2023. Of these 42 products, 16 are Individual products and the remaining 26 are
Group products.

Insurance Repositories

The Insurance Repository System is an initiative of the IRDAI to de-materialize insurance

policies. To achieve this objective, the IRDAI issued the guidelines on Insurance Repositories and
electronic issuance of insurance policies in April, 2011. Subsequently in May, 2015, the IRDAI
has issued the "Revised Guidelines on Insurance Repositories and electronic issuance of
Insurance policies". As on 31st March 2023, there were total 1.41 crore eIA (Electronic Insurance
Account) created and a total of 1.37 crore policies converted into electronic mode since April
2011.

There are four Insurance Repositories approved by the IRDAI as on March 31, 2023. They are:

➢ NSDL National Insurance Repository

➢ CDSL Insurance Repository Limited
➢ CAMS Repository Services Limited
➢ Karvy Insurance Repository Limited

Third party Administrators (TP 's)

As at March 31, 2023 there are 18 active TPAs. No Certificate of Registration was granted to any
new TPAs during 2022-23. The TPAs expanded the network of the hospitals by adding 26,717

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health services agreements to their networks. After withdrawal/removal of 8,816 the number
of agreements in the network remained 1,90,116 as on 31st March 2023.

Performance of Insurance Agents and Intermediaries in Health Insurance Business (Excl. and
Travel Insurance)

Amongst various channels for distribution of health insurance policies, individual agents
continued to contribute a major share in total health
insurance premium at 30 percent as in the previous
year. The share of this channel was high at 73 percent
in individual health insurance premium. 100 per cent
of Government business and about 28 per cent of
total health insurance premium is procured by
insurers directly.

Third important channel for distribution of health

insurance business is insurance broker channel, who
contributed 28 percent of total health insurance
premium. The share of brokers was high at 48
percent in group health insurance premium.
Corporate agency channel contributed nine percent
of total health insurance premium and "Online Sale"
channel contributed two percent of total health
insurance premium.

OECD International Network on Financial Education (INFE )

The Organization for Economic Cooperation and Development (OECD ) provides a unique policy
forum for governments to exchange views and experiences on financial education as an
important means to financial inclusion. Having recognized the importance of financial literacy,
International Network on Financial Education (INFE ) was launched in 2008 by governments.
India participates regularly in the OECD 's activities, represented by INFE four of India's financial
regulators viz. , , RBI SEBI IRDAI PFRDA IRDAI and INFE became a member of OECD in April,
2012. During meetings, the participants share initiatives taken across the globe with regard to
Financial Literacy and Financial Inclusion. IRDAI participated virtually in the Symposium on
'Financial OECD literacy and financial resilience in challenging times' which was held on 11-14
Oct, 2022.

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FUNCTIONING OF OMBUDSMAN

The Offices of Insurance Ombudsman are under the administrative control of Council for
Insurance Ombudsmen (CIO ), which has been constituted under the Insurance Ombudsman
Rules, 2017. CIO works in close co-ordination with Life Insurance Council and General Insurance
Council at regular intervals.

Office of Insurance Ombudsman is an alternate Grievance Redressal platform which has been
setup with an aim to resolve grievances of aggrieved policyholders against Insurance Companies
and its Intermediaries or Insurance Brokers in a speedy and cost-effective manner. 17
Ombudsman Centres across the country are functioning in various locations, viz. Ahmedabad,
Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Jaipur,
Kochi, Kolkata, Lucknow, Mumbai, Pune, Patna and Noida. After receipt of all requirements,
Insurance Ombudsman shall dispose of the complaint by way of an award within a period of
three months and such decision shall be binding on the Insurance Companies and its
Intermediaries or Insurance Brokers as the case may be.

Where the grievance is not resolved in favour of the policyholder or partially resolved in favour
of the policyholder, the insurer shall inform the complainant of the option to take up the matter
before Insurance Ombudsman giving details of the name and address of the Ombudsman of
competent jurisdiction.

Reforms and Regulatory Initiatives in Indian Insurance Sector

'Vision 2047' of the , announced in 2022 towards 'Insurance for All', has continued IRDAI to be
worked forward during the financial year 2022-23. The further groundwork to enhance
insurance penetration and to ensure the availability, accessibility and affordability of insurance
for all citizens and businesses has been on broadly 3 fronts:

➢ Regulatory reforms to further rationalizing regulatory framework for 'ease of business'

and reducing compliance burden of regulated entities.
➢ Initiated 'State Insurance Plan' to achieve 'insurance inclusion'.
➢ Technology initiatives towards digitization of the insurance industry.

IRDAI's stakeholder engagement, uniquely formalised in theme-based 'Bima Manthan', that

gets together all insurance industry leaders, in implementation of the shared vision, saw the 3rd
edition being held in March 2023. Supplementing this engagement process has been the 'Open
House' meets held on the 15th of every month for insurance industry participants to directly
engage to resolve operational concerns as also to propose ideas or solutions that enhance
service processes and customer experience.

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State Insurance Plan - A Step Towards Insurance Inclusive India

During the FY 2022-23, IRDAI has initiated the State Insurance Plan (SIP ) with an objective
towards “Insurance for All by 2047”. The Plan envisages implementation of various strategies
and activities towards increase in insurance penetration across various parts of the country in
close coordination with the State Government machinery.

The State Insurance Plan is a collaborative and consultative effort from the entire insurance
industry to deepen insurance penetration. Each State/ has been assigned UT to various insurers
and are designated as Lead Insurers. The insurers are expected to constitute State Level
Insurers' Committees (SLIC ) and District Level Insurers' Committees (DLIC ) involving the State
Administration and other insurers. State- specific strategies, to be developed and enabled for
each State, encompassing pockets or sectors hitherto not accessed by insurers or where
significant 'insurance coverage gaps' exist.

The State Insurance Plan shall focus inclusive insurance fixing the protection gaps across all
sections and sectors of society. It is expected to enhance resilience against natural disasters and
catastrophes and equip the States/ s with a social UT safety net covering the underserved
population. The endeavor is to increase the level of Awareness and Access for insurance
coverage across the length and breadth of the country

Discontinuation of monthly Solvency Returns of Insurers (applicable to General Insurers,

Reinsurer, s including Lloyd’s)

IRDAI has discontinued the filing of monthly solvency returns by the Insurers with immediate
effect to reduce the compliance burden of the insurers. However, the insurers whose solvency
margin is less than 1.55 as at the end of any quarter, shall continue to report the monthly
solvency position until the solvency position is restored to 1.55.

Filing of Insurance Products for Dwellings, Micro and Small Businesses

The IRDAI issued guidelines for standard products for Fire and allied perils for dwellings, micro
and small businesses, namely Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and
Bharat Laghu Udyam Suraksha.

These standard products replaced the Standard Fire and Special Perils (SFSP ) policy for the
named risks and no product other than the standard products was permitted for Fire and allied
risks. To provide wider choice to Policyholders and to meet their needs in terms of suitability
and affordability, the IRDAI, has allowed insurance companies to design alternative and
customized products for dwellings, micro and small enterprises for Fire and Allied Perils. Such
alternative products may be variations of the standard product and may include already

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approved add-ons as part of the base product or may delete an existing provision. However, the
definitions and wordings of terms used in the standard product shall be the reference point for
those terms when used in the alternative products.

Working towards a Future Ready Insurance Industry

Indian Insurance sector is at an inflection point. IRDAI, has taken up the vision of Insurance for
All by 2047, so that every Indian has appropriate life, health, and property insurance cover and
every enterprise is supported by appropriate insurance solutions. As the industry steers towards
a principle-based regime IRDAI has constituted the following teams in mission mode:

Risk Based Supervisory Framework (RBSF ):

With a view to promote a 'Principle based Regulatory regime', foster ease of doing business,
reduce compliance burden and encourage proactive risk identification and management, the in
June 2022 IRDAI recognized development and implementation of a 'Risk Based Supervision' (RBS
) framework for insurance sector in India, as a 'mission mode' project. RBS is a forward looking
approach that aims at mitigating risks, safeguarding the interests of policyholders, and
ultimately maintaining the stability of the insurance sector by enhancing supervisory focus on
the manner in which risks are identified, measured and managed.

IRDAI has been engaging with various stakeholders on a continuous basis for ensuring smooth
implementation. The first phase of pilot test/s for RBS has commenced from July 2023.

Risk based capital (RBC): Current Solvency Regime is based on a two factor-based model
whereby regulatory minimum capital ( RSM – Required Solvency Margin) for life insurance
business is determined by applying factors on Mathematical Reserves and Sum-at-risk. Similarly,
RSM for General insurance business is derived by applying factors on written premium and
incurred claims.

With the objective of designing a framework for Risk Based Capital and its implementation,
IRDAI constituted a RBC Mission Mode Team in the month of June, 2022. The RBC framework
would serve as a pivotal mechanism to enable insurers & reinsurers to maintain an appropriate
level of insurance and reinsurance business. Ind-RBC (Indian Risk based Capital) Framework
aims at identifying various risks faced by insurance & reinsurance companies and quantifying
each risk following probabilistic approach.

Insurance Information Bureau of India (IIB)

With the advent of various new-age technologies and Insurers being rigorously updating their
Infrastructure systems, there is a significant improvement in the data maintenance pertaining

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to the Insurance Business in India. IIB being the pivot of these data sets, has seen enormous
opportunity in centralizing and analyzing the data so that insights from the data are reachable
across the industry for empowerment in various aspects of the growing insurance business.

Below is the list of such key initiatives offered by IIB of India—the Data Analytics body promoted
by IRDAI.

Life Insurance
The Life Vertical of IIB conducted the following activities in the year 2022-23:

• Life Insurance Underwriting & Claims Search Tool (QUEST): IIB handled over one crore
queries during the year. The tool provides insurance history of proposers and red-
flagged potential frauds in life insurance/claims.

• Predictive Life Risk Scoring Model (PRISM): Generated risk scores on a scale of 0 to 1000
against queried proposals of life insurers and helped insurers in filtering out potentially
adverse risks at the entry/underwriting stage.

• Persistency Model: IIB developed a Persistency Model and completed a pilot with two
Life Insurers. The model indicates propensity of a Proposal for persistency.

• Clearance of unclaimed amounts: IIB assisted life insurers in clearance of unclaimed

amounts by providing latest contact details on life insurance policies, which was utilized
by 16 life insurers.

Motor Insurance
IIB provides insurers a real-time search service called SUDARSHANA for providing the Policy &
Claims history of any vehicle for multiple preceding years along with a Risk Score for Private
Cars. Today, IIB receives registered vehicles data from VAHAN database and to address Vehicle
Class/Sub-Class misrepresentation. IIB has developed a real-time API called UDAYAN for
sharing vehicle details. Additionally, IIB is generating the Uninsured Vehicles List.

PRATIBIMB is a daily visual representation of policy & claims statistics. It provides an overview
of Motor business across India segregated on the basis of geography, share of PSU & Privates,
nature of loss etc. along with trends across 5 FYs Additionally, there is a dynamic view for self
vs peers.

Health Insurance-

To support the Insurance Industry, the following activities are taken up in the Health segment:

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 1. PORTABILITY to assist industry underwriting to check claim history of insured who have
opted for portability during proposals.

2. ROHINI is an application which provides a unique identification number across the

Industry to Hospitals who are providing cashless facility to its customers. This ROHINI ID
is then used as a common identifier across the Industry for all analytical purposes.

3. BIMA SATARK is a Health Fraud Analytics System developed by IIB under guidance of
IRDAI, which enables Insurers to take an informed decision on claims, underwriting &
digital purchase journey of customers.

OLB (Other Lines of Business)

Roadmap with the following offerings is planned in Fire insurance:

• iPRAN – Risk District Level Fire insurance exposure and claims experience details of 5
years are provided.

• iDARPRAN – Corporate Customer level exposure in Fire insurance vis-à-vis claims history
of 5 years across all insurers can be studied while tracking major occupancies and risk
locations.

• PRAGYA – Asset level identification and analysis on live map with the help of Latitudes
and Longitudes and is useful to mark risk concentrations and other geospatial layers
which pave ways to develop risk scores.
Apart from the above, IIB also provides customized reports to insurers basis their data
requirements. These reports are largely directed towards business trends, penetration,
claims experience etc. This will not only benefit insurers but also create an optimized
environment for other stakeholders, helping to mitigate fraud and address lower
penetration.

IRDAI/F&I/CIR/INV/165/8/2022 (Amendments to Investments-Master Circular 2016)

Dividend criteria for classification of ETFs

Relaxed the norms for investment in Exchange Traded Funds. This circular modified the Para
1.3(g) of Investment master circular indicating that at least 85 per cent (Earlier 100 per cent)
securities in the equity basket shall be from stocks with respect to dividend distribution norms
as per Regulation 3(A)(15) of IRDAI (Investment) Regulations, 2016 to qualify as a part of
“Approved Investment”.

Investment in Mutual Funds

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Investment limits in Gilt/G-sec/Liquid/Debt/Income Mutual Funds (all taken together) for life
insurers having more than ₹2.5 lakh crore AUM is increased to 5 per cent from the current limit
of 3 per cent. The higher limits would facilitate life insurers to have more flexibility and liquidity
in investments.

Long Term Bonds by Banks – Financing of Infrastructure and Affordable Housing

Exposure to Long Term bonds issued by Banks for financing infrastructure and affordable
housing shall not be part of exposure to BFSI. The change will help insurers to have higher
exposure in such bonds while staying within the Benchmark sector exposure limits.

Investment in Additional Tier I (Basel III compliant) Perpetual Bonds

For investments of insurers in Additional Tier I (Basel III Compliant) Perpetual Bonds (AT1
Bonds), the limit of 10 investment in a single IPO of AT1 Bonds is removed with the limitation of
the overall limit of 10 out of total outstanding AT1 bonds of a particular Bank subject to meeting
specified conditions. This has enabled insurers to have more flexibility while making investment
in the AT1 bonds.

Separate Limits for Debt Instruments and Units of INVIT/REIT

The investments in the Debt Instruments of Real Estate Investment Trust (REITs) and
Infrastructure Investment Trust (INVITs) are now permitted apart from the Units of REITs and
INVITs subject to exposure norms for single investee company as specified. This has facilitated
insurers to invest more funds in the infrastructure and also bring flexibility while making
investments.

Dividend Criteria for Equity investment under approved investment

Dividend Criteria, to classify investments in preference shares and equity shares as part of
Approved Investment, is revised from 2 consecutive years immediately preceding to 2 out of 3
consecutive years immediately preceding. Such relaxation allowed insurers to have wider
options while making investments in the equity and preference shares.

Amendments made through the Master Circular issued vide circular No.
IRDAI/F&I/CIR/INV/226/10/2022 dated 27th October 2022 and subsequent clarifications
Brief of amendments are as under:

1. For investing in IPO, the requirement to be part of the Financial Sound Group has been
relaxed and the Board of the insurer can have their own criteria subject to compliance
of the regulatory requirements. This has enabled the insurers more flexibility while
making investments in .

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 2. Investment in Mutual Fund – Insurers shall not invest more than 20 percent of total
investments in any one Mutual Fund house w.e.f 1st April, 2023 to avoid concentration
risk.
3. Investment in AIFs – Insurers are not permitted to invest in any scheme of AIFs that have
a priority distribution model wherein such AIFs have adopted a distribution waterfall in
such a way that may lead to a share of losses more than pro-rata to their holding,
compared to other investors belonging to the same class. This provision prohibits the
investments in an AIF which has differential treatment for the same class of investors in
an AIF and in turn protects the investments of the insurers.
4. No further investment is allowed now in any investments of or managed by IL&FS AMC.
5. To avoid concentration placement of Investments through a single Security Brokers is
limited to 5 transactions done through brokers.

IRDAI/F&I/INV/CIR/248/12/2022 (Declaration of NAV on a quarter ending day, which is a

holiday)
The insurers shall declare NAV for the last business day of a financial year even if it is a Non-
Business day as per the existing regulations. IRDAI has been considering the request of the
insurers for declaration of NAV when a quarter ends on a non-business day. As part of ease of
doing business, the insurers are now permitted to declare NAV at the quarter end even if such
quarter ends on a non-business day so that the transactions on such non-business day can
happen at the NAV of the ULIP financials.

Investments in Sovereign Green Bonds.

The Investment in Sovereign Green Bonds shall be treated as “Investment in Infrastructure” and
shall be classified as “Central Government Securities.” This will enable more investment in the
infrastructure sector.

Investments in the Demerged entity.

As per Regulation 3(a)(4) and 3(a)(5) of IRDAI (Investment) Regulations, 2016 read with clause
111 of IRDAI Investment Master circular dated October 27, 2022, insurers shall classify
investments in Preference Shares and Equity Shares as part of “Approved Investment” if
dividend is paid on such shares “for at least 2 years out of 3 consecutive years immediately
preceding”. This circular clarifies that these criteria are applicable to the “Demerged Company”
and will be reckoned for the purpose of classification of investment in equity and preference
shares in resulting investee company(s) as “Approved investment” for initial two financial years.
This will enable the insurers not to liquidate such investments in the demerged entity, which do
not meet the dividend criteria for the specific period and continue to reckon such investments
towards the approved investments.

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Regulating Maintenance of Margin of Solvency

Every insurer and reinsurer shall at all times maintain an excess of value of assets over the
amount of liabilities, of not less than fifty per cent of the amount of minimum capital as stated
under Section 6 of the Insurance Act, 1938 and arrived at in the manner specified by the
regulations.

The Insurance Act, 1938 (as amended from time to time) specifies a level of solvency margin
known as control level of solvency, which currently is 150 per cent of Required Solvency Margin.
In the case of life insurers, every insurer shall determine the Required Solvency Margin, the
Available Solvency Margin and the Solvency Ratio as per Insurance Regulatory Development
Authority of India (Actuarial Report and Abstracts for Life Insurance Business) Regulations, 2016.

In the case of general insurers, Re-insurers and Branches of Foreign Re-insurers, the Required
Solvency Margin shall be the maximum of the fifty percent of minimum capital / Assigned
Capital requirement for the insurer or reinsurer or Branches of Foreign Re-insurers; or higher of
RSM-1 and RSM-2 computed as under for each Line of Business separately:

• RSM-1 means the Required Solvency Margin based on net premiums, and shall be
determined as twenty percent of the amount which is higher of the Gross Premiums
multiplied by a Factor A and the Net Premiums. For the purpose of calculation of RSM-
1, 'Trailing 12 month's premium' will be taken into account.

• RSM-2 means the Required Solvency Margin based on net incurred claims, and shall be
determined as thirty percent of the amount which is the higher of the Gross Incurred
Claims multiplied by a factor B and the Net Incurred claims. For the purpose of
calculation of 2, Claims will be taken RSM into account as maximum of 'Trailing 12
months Claims' and 'Trailing 36 months Claims divided by 3'

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