The Insurance Regulatory and Development Authority of India (IRDAI) has called upon insurance companies to focus on expanding their bricks-and-mortar branches across the country, in tandem with enhancing their digital platforms. The regulator emphasized that a physical presence remains critical in building customer trust, especially in remote and underserved regions.
In a recent master circular on operations, the IRDAI highlighted that establishing physical offices in various locations is key to gaining customer confidence, particularly in rural or less urbanised areas. While digital offerings play a significant role in modernising customer engagement, physical branches help insurers maintain visibility and strengthen relationships with policyholders. “Physical presence through bricks-and-mortar offices plays a pivotal role in fostering customer trust, particularly in remote areas,” stated the regulator. It further noted that establishing business units must be done judiciously, ensuring the interests of policyholders are safeguarded. According to the circular, any insurance office must be established within one year of approval; failing this, the approval would lapse.
The IRDAI also outlined clear guidelines for insurers looking to establish overseas liaison offices. To set up a representative or liaison office outside India, insurers are required to obtain board approval for all operational matters. Additionally, insurers must make provisions to ensure that policyholder liabilities arising from international operations are adequately ring-fenced to protect the interests of Indian policyholders. These overseas offices can perform a variety of tasks, including promotion and awareness of insurance products, liaising with foreign brokers and reinsurers, and educating potential customers about the advantages of insurance. They can also conduct seminars and facilitate the signing of treaties.
As per IRDAI data, the total number of life insurance offices in India increased to 11,256 by March 31, 2023, marking an increase of 196 offices from the previous year. Notably, 59% of life insurance offices are located in Tier I cities with populations of over one lakh, while only about 0.76% are in the Tier VI category, which includes areas with populations under 5,000. In terms of distribution, public sector life insurers were present in 92% of districts, with offices in 688 out of the 750 districts across the country. On the other hand, private sector insurers were operational in 604 districts. General and health insurers together operated 9,917 offices, marking a decrease of 858 offices from the previous year, largely due to reductions in the public sector’s footprint. The number of offices for private sector general insurers grew by 129 during the same period. The IRDAI’s push for more physical insurance offices is part of a broader effort to improve accessibility, expand coverage, and enhance customer engagement across all segments of the population. This initiative, in conjunction with the digital expansion, aims to create a more robust and customer-centric insurance ecosystem in India.
