Government needs to show urgency in appointment of chairman and members of regulatory bodies like IRDAI.
The empty post of IRDAI chairman sends the wrong signals not only to the industry but also to the millions of policyholders
It has been more than 7 months, but the post of the chairman of Insurance Regulatory and Development Authority of India (IRDAI) is still lying vacant. Though it may not be the first time that the position has been lying vacant, the matter of concern is the fact that in the present situation when the fears of the third wave of the COVID-19 pandemic are lurking around the top position has been left unoccupied. The empty post of IRDAI chairman sends the wrong signals not only to the industry but also to the millions of policyholders.
It is not just because of the fear of pandemic but also due to the sheer size of the insurance industry, a proactive approach is required by the government to protect the interest of policyholders. Without the chairman this task looks difficult, as there are many key decisions which can only be taken at the corner of the office. Consider this, while the mutual fund industry has an average Assets Under Management (AUM) of Rs 38 lakh crore (as on October 2021), Ulip funds by life insurance companies alone have an AUM of Rs 39 lakh crore. In addition, AUM of traditional policies and annuity funds is Rs 26.19 lakh crore and Rs 8.9 lakh crore, as on March 31 2020. The number clearly states why the top position at insurance regulator holds importance in the interest of policyholders.
“It is the 100 per cent responsibility of the government to appoint a chairman. If the process takes 6 months time then ideally the process should be started 6 months in advance or otherwise the extension should be given to the existing chairman. Without a chairman it weakens the institution as many important decisions can only be taken by the chairman. Currently, out of 9 only 5 members are working as members in IRDAI. The government should have shown some sort of urgency in appointment of Chairman and Members of regulatory bodies like IRDAI,” said Nilesh Sathe, former IRDAI member and veteran of Life Insurance Corporation.
The post of IRDAI chairman has been vacant since May 5, after Subhash C Khuntia stepped down on completion of his term. However, for the appointment of new chairman in IRDAI, applications were invited just a few days before on April 30, 2021. According to the circular the consolidated pay and allowances of the chairperson shall be Rs 4.50 lakh per month without the facility of house and car. Last date for receipt of applications was May 29 2021. But so far the position has not been filled and no news on appointment has yet been shared by the government.
The second wave of Coronavirus has already taught many of us the importance of having insurance for the protection of our families. It was the time when increasing number of people started buying insurance on the back of health concerns and the rising treatment cost. During this period the regulator also quickly launched Coronavirus specific policies making insurance available at affordable rates.
Incidentally, the government has recently extended the tenure of Reserve Bank of India Governor Shaktikanta Das for another three years till December 2024. Such proactive behaviour is required for the insurance sector also to make it robust and dynamic in the interest of policyholders.