Modi government to allow 100% FDI in insurance sector: Report
What's the story
The Indian government is gearing up to introduce major reforms in the insurance sector, including allowing 100% foreign direct investment (FDI), according to a Times of India report.
The changes are part of the proposed Insurance Amendment Bill, which will be tabled during the winter session of Parliament later this month.
Currently, the FDI limit for insurance companies is capped at 74%.
Market impact
Proposed bill aims to boost competition, investment
The proposed bill seeks to eliminate the current FDI cap altogether, allowing foreign players to enter and operate freely in the market.
This is expected to lure major global insurance players, thus driving competition as well as investment in the sector.
The bill also proposes amendments that would permit insurance agents to sell policies of multiple companies.
Agent flexibility
Reform to enhance agents' role, product range
The proposed changes seek to eliminate the current restriction that allows agents to have only one life and one general insurer.
This would officially allow agents to serve as intermediaries for a range of products across life and general insurance sectors.
The reforms are part of the Centre's plan to boost insurance penetration in India, which currently remains around 4%.
Regulatory changes
Bill to ease regulatory requirements, propose composite licenses
The Insurance Amendment Bill also plans to ease some regulatory requirements concerning company directors.
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed amendments to allow firms to hold composite licenses.
This could benefit companies like Life Insurance Corporation of India (LIC), which is eyeing an expansion of its product range by acquiring a health insurance company.
Solvency relaxation
Proposed reforms aim to strengthen insurance sector
The government is also mulling easing solvency requirements, a move that would free up capital for insurers to enhance their operations and offerings.
The proposal is part of an effort to provide a more robust insurance sector for consumers.
The proposed reforms come as some foreign players such as Allianz look to exit their partnerships with Indian firms like Bajaj Finserv and enter the market independently.