An expert panel from Indian Institute of Management Kozhikode (IIMK) has suggested major reforms in India’s insurance sector to make it more efficient and accessible. IIM Kozhikode has recommended splitting LIC into Small Units and reduction of Govt Stake in insurance companies.
What are the key recommendations?
- Splitting and unbundling LIC
The panel has recommended breaking Life Insurance Corporation of India (LIC) into smaller, more focused units.- This could improve efficiency, decision-making, and customer service.
- A large, single entity like LIC can be slow and less flexible compared to smaller specialized units.
- Divestment of public sector general insurance companies
The panel suggests reducing or selling the government’s stake in public sector general insurers.- This would bring in private investment, better management practices, and more competition.
- Increased competition can improve service quality and reduce costs for customers.
Why were these suggestions made?
These ideas came out of two days of discussions by the Life Insurance Council and General Insurance Council, focusing on the national goal of “Insurance for All by 2047”—ensuring every Indian has access to insurance by the time India completes 100 years of independence. The report, submitted to the insurance councils and Insurance Regulatory and Development Authority of India (IRDAI), highlights three major requirements:
- Technological leapfrogging
Using advanced technology (digital platforms, AI, data analytics) to expand insurance reach quickly, especially in rural and underserved areas. - Capital deepening
Increasing investment and capital in the insurance sector so companies can expand coverage, manage risks better, and remain financially strong. - Stronger institutional trust
Building public confidence in insurance companies and regulators through transparency, good governance, and fair claim settlements.
The panel believes that structural reforms, more private participation, better technology, and stronger trust are essential to make insurance affordable, efficient, and available to every Indian by 2047.
More details will be released soon.
