Money needed for raising the current 3.9% penetration, says IRDA chairman Vijayan.
TS Vijayan has said that all three verticals in the insurance sector Life, Non-Life and Health will be in a better position by 2015 in terms of premium collection if this extra investment can be gathered.
ET quoted Vijayan as saying, "Our calculation was that, in the next five years, to increase the penetration, Rs 50,000 crore to Rs 60,000 crore is required. This was our calculation some time ago. When the sector started, it (insurance penetration in the country) was less than 2%. It has doubled to 3.9%, I will not say it will double again. But there will be substantial growth (with the investments in the next five years)."
These figures, he further said, were calculated and validated by the IRDA after factoring in GDP growth, inflation figures, rupee stability, and production numbers in the next five years.
The insurance regulator hopes the sector may have good growth numbers in FY16 when compared to the current year.
This target is all the more achievable because IRDA has now revised its guidelines to incorporate: 1) Transparency, 2) Protection, 3) Customer centricity, and 4) Long-term focus.
Vijayan told ET that growth was good so far owing to these reforms, though penetration will still take time to pick up.
"Non-life is also doing well. Down the year 2015, I believe though it is difficult to predict what is going to happen, all the three sector should see very good growth," he added.
As an afterthought, Vijayan also praised the Pradhan Mantri Jan-Dhan Yojana, which he said was an excellent program and hoped there would be a “Jan Bima Yojana” soon.
(Source: This article has been adapted from the article "Rs 60K-crore investments needed for more insurance penetration: IRDA chairman T S Vijayan" that appeared on December 18, 2014 in economictimes.indiatimes.com.)