Changes in insurance sector will help create value for customers: Parekh

The massive changes taking place on the regulatory front in the insurance space will help in ease of doing business, encourage development of longer-term products and improve persistency, thereby creating value for customers, according to HDFC Life Chairman Deepak Parekh.

Addressing the company's 23rd annual general meeting, Parekh, who till June 30 was the chairman of HDFC which got merged with HDFC Bank, said several changes that the regulator Irdai is proposing would enhance insurance penetration, facilitate sustainable growth and ease the operating environment.

The regulator has already introduced use and file regime for faster product launches and revised the expenses of management and commission guidelines to provide greater flexibility to companies to manage their cost structures.

These regulations will increase the ease of doing business, encourage development of longer-term products, improve persistency, thereby creating value for customers, Parekh said.

Further, he said that granting of composite licences, enabling distribution of other financial products by insurers and allowing insurers to set up an insurtech subsidiary, are being discussed by the government to boost stakeholders' confidence in the insurance space.

Parekh said the life insurance sector has recovered from the aftermath of the pandemic in FY23 and grew 18 per cent and collected new business premium of Rs 3.7 lakh crore compared to Rs 3.1 lakh crore in FY22.

Private life insurers grew 24 per cent in individual business and recorded a 17 per cent growth in group business during this period.

Meanwhile, Parekh said HDFC Life subsidiary HDFC Pension Management Company has doubled its assets under management in 18 months, exceeding Rs 45,000 crore in FY23.

This makes it the largest and fastest growing pension fund manager in both retail and corporate NPS segments with a market share of 41.2 per cent from 36.9 per cent with 60 per cent growth in assets under management, he added.

He also said HDFC International Life has received the regulatory approval to establish a branch in the IFSC which will help the company tap new opportunities by serving the needs of global Indians.

He said the low insurance coverage, favourable demographics, increasing life expectancy and growing consumer awareness regarding financial protection bode well for the industry.

Longer life expectancy also signifies a greater need for retirement planning, making the retirement space a substantial opportunity in India alongside life insurance business, he said.