Debasish Panda has been appointed as IRDAI Chairperson on March 11, 2022. However, why was the IRDAI chairman position vacant for so long and what challenges and duties will Mr Debasish Panda will have to face in the coming months. Let’s have a look!
The IRDAI is pretty much the main regulatory body of the insurance industry in India. Established in 1999 it is essentially your watchdog, ensuring the protection of the customers and the stability of the insurance industry.
It is a 10-member body comprising – a chairman, five full-time members, and four part-time members. However, according to news sources, only 5 out of the 9 positions were filled up till November. What’s more? The IRDAI had been missing a chairman for the past 10 months during a deadly pandemic.
What could be the reasons and events that lead to such an important organisation being extremely understaffed? We can only speculate. We know that the chairman of IRDAI is an important role so what can be the reasons for such an important seat to be empty since May 2021?
What does the IRDAI Chairman do?
Firstly, let us look at the core objectives of the IRDAI. Mainly the regulator is responsible for ensuring that the provisions under the Insurance Act, of 1938 are followed by the insurance companies and other stakeholders in the insurance sector.
As mentioned on the IRDAI’s website, some of their missions and values are-
- Protecting policyholders’ interests and fair treatment.
- Impartial regulation of the insurance industry.
- Making sure of the financial stability of the insurance sector.
- Making regular changes and reforms in the insurance sector so that it operates without any trouble.
On a larger level, the chairman is responsible to drive proposals and help innovations to rise in the industry through this time of trial. All of these activities are on hold.
To read more about the workings of the IRDAI check out our article on Who watches the watchdog?
What can be the reason for the IRDAI chairman position had been vacant since May 2021?
– High pressure during covid
This has been a difficult time for the insurance industry, and taking over the reins during such a time comes with its own challenges and responsibilities. Whoever takes charge will have to start getting their house in order, working towards the core mission while also taking care of the disruption to the insurance industry that has happened because of the COVID-19 pandemic.
– Delay in putting out the call
The call for the position was put out just 2 weeks before Mr Subhash C Khuntia’s retirement as the chairman of IRDAI. Usually, the call for this position is put out at least 2 months prior to the chairman’s retirement. The untimely planning and a time of high pressure added to finding the right fit for the seat all lead to a delay in finding a chairman for the IRDAI.
Even before Mr Subhash C Khuntai’s appointment, there was a lag of 2 months.
– Increased work load
Major decisions like continuation or cancellation of covid-specific policies, revision of pricing for health and general policies and the management of claims during covid are all hanging.
According to the head of underwriting of a private insurer, ”There are key developments and decisions to be taken which will need a chairman,’’. These decisions will set the course for generations to come, this comes after the added pressure of dealing with a pandemic.
– Lack of urgency
There was a distinct lack of urgency for choosing the chairman of IRDAI. In comparison to the RBI, when chairman Mr Shaktikanta Das retired, there was an immediate notice given out for the position, and the replacement hunt was conducted with a lot more urgency
The same care should be given to the IRDAI. Out of 9 members, only 5 positions were filled according to a former IRDAI member Nilesh Sathe as of November 2021 according to a news article by Business Today.
Interestingly, this laxity wasn’t seen for SEBI or even for IBBI, where the selection process works like clockwork.
About the IRDAI’s new chairman – Mr Debasish Panda
The new chairman of IRDAI is a retired IAS officer. He has been currently appointed for a three year period. According to reports, insurers are happy with his appointment as they believe he has prior experience in the Indin insurance industry.
While Mr Debasish has had a career as a bureaucrat, he has also been on the board of two of the largest government companies – LIC and New India Assurance. He has been heavily involved in the divestment of IDBI and the proposed Initial public offering (IPO) of LIC.
The effect of this
There are obvious trickle-down effects of this throughout the industry and the country. It isn’t just due to covid but the sheer size of the industry that plays a role here. Key development decisions like rise in premiums, covid insurance protocol and many more are awaiting a chairman. Even routine clearances were getting delayed. These are big concerns for the insurance sector which has already taken a major financial hit during 2020 and 2021.
With Mr Debasish Panda‘s appointment, he will have to hit the ground running and get his house in order.
We can see that several health insurers are fighting a high loss ratio, which is why a lot of them have reduced the issuance of Covid-specific health covers during the pandemic. This is an important concern.
Most general and health insurers have also introduced a “cooling period” for purchasing a health policy after battling through the coronavirus. Staying on top of such actions by the stakeholders in the industry requires a robust team that is led by a chairman.
Read on more on economics times.
Conclusion
The final appointment of the chairman for IRDAI have been made by the Finance ministry as per the recommendation of the financial sector regulatory appointment search committee (FSRAC). We hope Mr Debasish Panda has a wonderful tenure ahead.