New Delhi, Oct. 14 -- India needs strong insurance regulation. Solvency, governance, consumer protection and disclosure require a firm regulatory hand, and Irdai has helped build a stronger, more policyholder-oriented market. But effective regulation also requires restraint, measurement and accountability for outcomes.

An important distinction deserves attention: the difference between regulating a market and designing it. A regulator must intervene against mis-selling, weak governance and threats to policyholders. But should it also decide what products should look like, how they should be distributed or how sophisticated market participants should transact? The closer regulation moves towards product design, pricing, distribution and c...