IRDAI should fast-track risk-based capital framework; GST on insurance needs rationalisation: Parliamentary panel

New Delhi [India], August 7 (ANI): Falgging the declining market share of public sector insurers, Parliamentary Committee on Public Undertakings (CoPU) called on the Insurance Regulatory and Development Authority of India (IRDAI) to fast-track the implementation of the Risk-Based Capital (RBC) framework and also recommended the government to examine GST rationalisation to boost insurance pentration across the country, as per a report tabled on August 6.
The Committee noted that the 18 per cent GST on insurance products has adversely affected affordability and insurance penetration. Thus, it "recommended that the Government examine GST rationalisation for health, term life, agricultural insurance and reinsurance products on priority, keeping in view the objective of Insurance for All by 2047 while balancing fiscal sustainability," the report noted.
The panel noted India's insurance penetration remains significantly below the global average and recommended: "DFS and IRDAI establish time-bound annual targets for increasing both life and non-life insurance penetration."
It observed the declining market share of public sector insurers and "recommended that each Insurance Sector CPSU formulate a clear market positioning strategy, and therefore, recommended that IRDAI expedite implementation of the Risk-Based Capital (RBC) framework to strengthen financial resilience, improve risk management practices and enhance policyholder protection," the report said.
Expressing concern over the weak financial health of three public sector general insurers, the CoPU has recommended Board-approved solvency restoration plans with quarterly milestones, while urging the government to treat capital infusion as a last resort after exhausting internal reforms.
"Government capital infusion should remain a supplementary measure after maximising internal reforms," it recommended, as per the report.
On digital transformation and claims automation, the Committee observed varying levels of digital maturity across insurance sector Central Public Sector Undertakings (CPSUs) and recommended the Department of Financial Services (DFS) to establish measurable digital transformation benchmarks.
"The Committee recommended wider adoption of claims automation, artificial intelligence, machine learning, fraud analytics, customer self-service platforms and integration with Bima Sugam to improve operational efficiency and customer service," it said. (ANI)