In the current race, industry chiefs and bureaucrats are in tough competition to sit on the pedestral to lead the insurance sector
The policy statement by the Monetary Policy Committee is keenly watched by market experts especially for the stance that is taken by the members, hawkish, dovish or neutral. A similar phenomena is seen in the insurance industry every five years when a new chairman is chosen. Industry watches keenly as to what stance the new chief would take.
Except TS Vijayan, the Insurance Regulatory and Development Authority of India (IRDAI) chairman who retired this week, all other chairman have been former bureacrats. This includes N Rangachary, CS Rao and Hari Narayan who were the first, second and third chairman respectively.
Vijayan was the first industry man who was chosen for the post. It was a sort of a comeback for Vijayan who had been demoted from chairman of Life Insurance Corporation of India to post of managing director due to some allegations of irregularities. He was however cleared of all charges by the Central Bureau of Investigation.
In the current race, industry chiefs and bureaucrats are in tough competition to sit on the pedestral to lead the insurance sector. Sources however point that bureacrats are top contendors for the post and even the govermment could favour having such an individual.
Whenever a new chairman is appointed, a slew of new reforms follow. These are done in the form of new regulations which have evoked mixed response from the industry because it impacts business.
Also, there have been multiple cases of past regulations being completely modified by new chairman. This, of course, causes momentary shocks in the business for companies. This included the complete product overhaul from January 1, 2014 where insurers have had to withdraw all existing products from the market and introduce new ones.
For instance, Hari Narayan often known as one of the toughest regulators had been instrumental in changing the regulations of unit-linked insurance product (Ulips). With thousands of customers having burnt their fingers and several stripped of their entire financial savings by unscrupulous agents promising unviable returns, IRDAI had taken a tough stand. This had led to the entire insustry scrurrying for cover and several agents exiting the profession.
Run-ins with fellow regulators have also not been uncommon, leading to fear among insurers about the future of their business. Securities and Exchange Board of India and IRDAI had in 2010 gotten into an infamous debate into who would regulate Ulips which are linked to the stock markets. IRDAI ultimately emerged in this battle.
Under Vijayan's tenure, as many as 60-65 regulations underwent changes. A large portion of it was also dictated by the changes in the Insurance Act after foreign direct investment was also hiked to 49 percent from 26 percent.Only called the Insurance Regulatory Authority in 1996, the word 'development' was added later in 1999 to make it IRDA (now IRDAI). All past heads of the body have stated that policyholders are their biggest priority followed by regulating the insurance sector. How will the new policies under the fifth chairman pan out is something the industry is waiting with baited breath.