India’s insurance sector sees growth of 17% over last 20 years
New Delhi: India’s insurance sector has witnessed remarkable growth, with a compounded annual growth rate (CAGR) of 17 per cent over the last two decades. A recent report projects the domestic market to reach an estimated US$ 222 billion by 2026. However, this rapid expansion comes with an increasingly intricate compliance landscape that insurers must navigate.
A single-entity insurance company operating from one state faces 2,236 unique compliance requirements, which rise to 4,638 annually when factoring in frequency. The sector is governed at central, state, and municipal levels, leading to hundreds of distinct regulatory obligations.
Additionally, insurers must secure 38 different licenses, permissions, and approvals under 27 legislative acts. Key approvals mandated by the Insurance Regulatory and Development Authority of India (IRDAI) include compliance with IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024, IRDAI (Registration of Corporate Agents) Regulations, 2015, and IRDAI (Insurance Brokers) Regulations, 2018, among others.
A report by TeamLease RegTech highlights the complexities of compliance management and the mounting regulatory burden on insurers. While the government’s move to permit 100 per cent Foreign Direct Investment (FDI) in insurance is expected to attract foreign capital and foster innovation, insurers continue to struggle with regulatory challenges.
With over 4,500 compliance obligations annually, firms must adhere to stringent financial stability measures, including solvency margins, anti-money laundering protocols, and policyholder protection frameworks.
Manual compliance tracking through spreadsheets and ad-hoc processes increases the risk of errors, inefficiencies, and operational bottlenecks.
The report underscores the urgent need for compliance automation to support the sector’s transition to a digital-first, paperless ecosystem. By leveraging technology-driven solutions, insurers can streamline operations, enhance efficiency, and ensure regulatory adherence with minimal disruption.
A strong compliance culture within organizations, led by proactive leadership, is essential.
Additionally, regulators must simplify compliance procedures, including introducing a single-window licensing framework to ease approval processes for insurers.
The report recommends increased adoption of Regulatory Technology (RegTech) solutions to automate compliance tracking and reporting.
Establishing a centralised digital repository for regulations would enable insurers to focus on growth and innovation rather than regulatory complexities.
Strengthening data security measures will further build customer trust and enhance the insurance sector’s credibility in an evolving digital landscape.
As the industry continues to expand, embracing regulatory reforms and technological advancements will be crucial to maintaining agility, compliance, and resilience in a dynamic marketplace.
