The Parliamentary Committee on Public Undertakings (CoPU) has called on the Insurance Regulatory and Development Authority of India (IRDAI) to fast-track the implementation of the Risk-Based Capital (RBC) framework to strengthen financial resilience and improve risk management practices. According to the report tabled on August 6, the committee noted the declining market share of public sector insurers and recommended that each Insurance Sector CPSU formulate a clear market positioning strategy. The panel emphasized that IRDAI should expedite the RBC framework implementation to enhance policyholder protection and operational efficiency.
The committee recommended that the government examine GST rationalization for health, term life, agricultural insurance and reinsurance products on priority, keeping in view the objective of Insurance for All by 2047 while balancing fiscal sustainability. As reported by The Hindu BusinessLine, the 18 per cent GST on insurance products has adversely affected affordability and insurance penetration across the country. The panel noted that India's insurance penetration remains significantly below the global average and recommended that DFS and IRDAI establish time-bound annual targets for increasing both life and non-life insurance penetration.
Expressing concern over the weak financial health of three public sector general insurers, the CoPU has recommended Board-approved solvency restoration plans with quarterly milestones. According to the report, the committee urged the government to treat capital infusion as a last resort after exhausting internal reforms, stating that government capital infusion should remain a supplementary measure after maximising internal reforms. This recommendation comes as the committee observed the declining market share of public sector insurers in the competitive insurance landscape.
On digital transformation and claims automation, the Committee observed varying levels of digital maturity across insurance sector Central Public Sector Undertakings (CPSUs) and recommended the Department of Financial Services (DFS) to establish measurable digital transformation benchmarks. As reported by The Hindu BusinessLine, the committee recommended wider adoption of claims automation, artificial intelligence, machine learning, fraud analytics, customer self-service platforms and integration with Bima Sugam to improve operational efficiency and customer service. These digital initiatives are aimed at enhancing the overall operational capabilities of public sector insurance companies.
