Negative impactSector
Why can a 10th-pass agent sell insurance, but a compliant institution cannot?
Economic Times 3 hrs ago·12 Aug 2026, 2:00 am
The Insurance Regulatory and Development Authority of India (IRDAI) is facing criticism for its rigid compliance rules, which some argue are outdated. The regulator requires insurance companies to submit physical documents and obtain physical signatures for many processes. This stands in stark contrast to the rest of India's financial system, which has rapidly moved to a Digital Public Infrastructure (DPI) model. This creates a paradox where a 10th-pass agent can easily sell insurance digitally, while a large, compliant institution is often bogged down by slow, paper-based procedures.
This regulatory mismatch creates significant operational hurdles for insurers. It increases administrative costs, slows down onboarding new customers, and complicates the distribution of products. For investors, this matters because it highlights a structural inefficiency in the sector. It suggests that the industry's growth could be throttled by legacy rules rather than market demand. Until the regulatory framework aligns with modern digital standards, insurers may continue to face friction that limits their scalability and profitability.
Key takeaways
- Category: Sector.
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