Kolkata, Feb 25 (PTI) The insurance industry must rein in 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" organised by CII here, Insurance Regulatory and Development Authority of India (IRDAI) member (Non-Life) Deepak Sood said 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 expenses of management (EoM) need immediate focus from all players. That 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 assume significance 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 the industry must prioritise 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.

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 that allows insurers to launch customer-centric products without prior approval but subject to regulatory norms.

Sood underscored 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 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 a sharper focus on cost rationalisation, digital distribution and customer-centric product design will be key if insurers are to balance growth ambitions with sustainable margins in the coming years. PTI BSM BDC

Insurance affordability: rein in acquisition and management costs to expand coverage, curb mis-selling and boost product access through design. High distribution and administrative expenses sustain a low-penetration, high-cost insurance model; insurers must reduce customer acquisition costs and expenses of management, reassess product and channel value, and adopt digital distribution and customer-centric design to improve affordability and margins. The regulator expanded the Use and File procedure to enable quicker product launches within regulatory norms. Mis-selling undermines trust and must be prevented by correct sales practices. Universal, meaningful coverage by 2047 is framed as the penetration objective, founded on affordability, accessibility and awareness.