This is in contrast to the current ‘file and use’ system where if an insurer wishes to introduce a new product, it has to file an application with the Insurance Regulatory and Development Authority of India (Irdai) and can sell the product only after getting all the regulatory approvals.
“We have already started this in some of the segments and we would like to go further. Unfortunately, this experiment which we tried sometime back, we found that some of the ‘use and file’ products did not live up to the regulatory requirement,” he said at the Virtual Actuarial Conclave 2021.
Khuntia also said the number of actuaries in the country is abysmally low for a country of India’s size. He called for increasing the number of actuaries to at least 1,000-1,200, from the current 458.
In 2019, there were 439 actuaries and in a year, that number has gone up by just 19.
An actuary is a person who assesses and manages the risks of financial investments, insurance policies, and other potentially risky ventures.
“… looking at the number of insurance companies we have and the size of our insurance business, which is 1.7 per cent of the global insurance industry, and considering the fact that we have 60,000 actuaries globally, I think we should at least aspire to have 1,000-1,200 actuaries in the country as soon as possible,” he added.
Khuntia said there is a need to change to the IFRS 17 accounting system for the insurance sector.
The regulator is also in the process of introducing risk-based solvency in the insurance sector.
Currently, insurers are required to hold assets that are 1.5 times their liabilities. But, once a risk-based capital framework comes into place, the insurers will have to hold capital in proportion to the business they write. If they are writing riskier business, they will have to hold more capital and vice versa.