IRDAI chief Subhash Khuntia warns insurance industry of action on low pricing

Citing examples of the state of Telecom and Aviation sectors due to below cost tariffs, Insurance regulator Subhash Khuntia on Friday said the health insurance industry should not indulge in predatory pricing which will harm the industry and the policy holders and make businesses unviable. He warned of actions if they don’t mend their ways.Get Moneylife’s 
Top Stories by EmailSUBSCRIBE “Of course (they are indulging in predatory pricing) and the Regulator will have to ensure that the industry runs sustainably. There will be basket of actions not one kind of action (to check predatory pricing) but we ensure that the health of insurance industry does not deteriorate you think they are engaging in predatory pricing to up their volume”, he said on the sidelines of 16th Annual Insurance Brokers Summit here. 

Earlier, he said the group health insurance sector has high business volumes but the losses are also high. “I would like to give a word of caution here though your share is very high in group health insurance, the loss ratio in group health insurance is also very high and probably it is not very sustainable at present. “So the insurance companies’ intermediaries and policy holders need to unite to create a sustainable atmosphere because in other industries if there is unfair competition industry suffers but the clientele don’t suffer. While this has happened in Airlines and telecom industries but we cannot afford that kind of a situation in the insurance industry because insurance is an industry for protection,” he further said.  “So if the industry suffers, then clientele also suffers. And as a regulator we would not like that to happen. One should not overcharge and also not undercharge,” Khuntia said. On the issue of state life insurer LIC paring its stake in IDBI Bank, he said “We have reminded the LIC. They have not come forward yet. We made a roadmap then. Hopefully it will be done quickly”. On proposed FDI hike in insurance sector, from 49 per cent to 74 per cent, he said “We have sought opinions of stakeholders on raising foreign holding to 74 per cent. According to the Act 49 per cent is the maximum limit for foreign direct investment. If it goes to 74 per cent naturally the Act has to be amended”, he said. On the issue of Ownership and management change that has to be changed in case FDI hike takes place, he said, “That I don’t know. No decision has been taken. We have communicated for stakeholders view to the government”