Kolkata, February 25 The insurance industry needs to control customer acquisition costs and overall management expenses to improve profitability and make products more affordable, a senior IRDAI official said on Wednesday.
Addressing the "InsureInd" organized by CII here, Insurance Regulatory and Development Authority of India (IRDAI) member (Non-Life) Deepak Sood urged insurers to evaluate the value delivered across products, channels, and business lines.
"The high cost of acquisition and high expenses of management (EoM) require immediate attention from all players. This is critical to improve profitability and deliver affordability and value to customers," he said.
His comments are significant as the Economic Survey for FY'26 highlighted rising acquisition and administrative expenses as a structural constraint for the sector, noting that a high-cost distribution model has kept insurance penetration low despite steady premium growth.
Sood said the industry needs to prioritize solutions to make health insurance affordable for the "middle-income" households that are neither affluent nor covered under government-backed schemes such as Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana.
Many in this segment struggle to secure adequate health cover, he noted.
The regulator, he said, has introduced multiple reforms to ease compliance and promote product innovation, including expanding the scope of the "Use and File" procedure, which allows insurers to launch customer-centric products without prior approval but subject to regulatory norms.
Sood emphasized that achieving universal and meaningful coverage in life, health, and property insurance by 2047 would be the true measure of penetration.
"Affordability, accessibility, and awareness must form the three pillars of growth," he said, adding that the premium-to-GDP ratio would only improve if products are priced within reach of ordinary households.
He also cautioned against mis-selling, saying it has eroded trust and harmed both customers and insurers.
"Selling correctly is essential for every salesperson, distributor, and insurance company," he said.
Industry observers said a sharper focus on cost rationalization, digital distribution, and customer-centric product design will be key if insurers are to balance growth ambitions with sustainable margins in the coming years.
