The Insurance Amendment Bill proposes to stretch the present 74% FDI cap for insurance companies and allow foreign players to enter the market and operate independently
The Government of India is planning to allow 100% foreign direct investments (FDIs) and introducing significant reforms in the insurance sector, according to a report in The Times of India. The move has been taken to improve the insurance coverage in India which currently stands at 4 per cent only, a downfall from 4.2 per cent in 2022.
The new bill proposes to stretch the present 74% FDI cap for insurance companies and allow foreign players to enter the market and operate independently. This will attract large global firms and boost investment in the insurance sector.
In addition, the reforms also include easing restrictions on insurance agents. These modifications are a part of the proposed Insurance Amendment Bill which is anticipated to be presented during the upcoming winter session of Parliament later this month.
Currently, the FDI market cap restricts insurance agents to one life and one general insurer but the new bill will allow them to sell policies from multiple companies and act as intermediaries for a wide range of products like general and life insurances, the report said.
A recent report by global consultancy management firm McKinsey revealed that India could potentially save about $10 billion annually by increasing insurance penetration to those people and assets that are still uninsured. It stated that Indian government could redirect these saved funds to stimulate economic growth.
In India, the rising healthcare costs and a growing middle class space increase the need for insurance coverage following the Covid-19 pandemic. But the numbers The Insurance sector regulator Insurance Regulatory and Development Authority (IRDAI) has also committed to achieving “Insurance for All” by 2047.
Currently, India has 24 life insurance companies, 26 general insurers, six standalone health insurance firms and one reinsurer ‘General Insurance Corporation’. These reforms come at a time when foreign players like Allianz are planning to exit their partnerships with Bajaj finserv, while entering the insurance market independently.