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 said that high distribution and administrative costs have locked the sector into a "low-penetration, high-cost" cycle, limiting its ability to expand coverage.
"The high cost of acquisition and high management expenses (EoM) need immediate attention from all players. This is critical to improve profitability and deliver affordability and value to customers," Sood said.
He urged insurers to evaluate the value delivered across products, channels, and business lines.
His comments are significant as the Economic Survey for FY'26 flagged 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 that the industry must prioritize solutions to make health insurance affordable for the "missing middle" households that are neither affluent nor covered under government-backed schemes such as Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana.
He noted that many in this segment struggle to secure adequate health cover.
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 that 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 will 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 improve only if products are priced within reach of ordinary households.
He also cautioned against mis-selling, saying it has eroded trust and hurt both customers and insurers.
"Selling correctly is an imperative for every salesperson, distributor, and insurance company," he said.
Industry observers said that 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.