India News Get -BusinessInsurance Laws; Plan to increase FDI limits under unified license | Parliamentary session
The government plans to amend insurance laws during the current parliamentary session. According to officials, two main changes are proposed. Unified license for insurance companies and increase in foreign direct investment (FDI) limit in this sector from the current 74% to 100%.
If these changes occur, the scope of insurance in the country will increase. According to research firm Swiss Re Institute, insurance penetration in India is currently only 3.8%. The unified license is a composite license. This will allow a single company to offer life, property and health insurance products.
Currently, life insurance companies cannot sell products like health coverage. However, general insurance companies are allowed to sell health insurance policies to marine insurance companies. The government wants to remove this complication.
What will be the benefit of allowing 100% FDI?
The insurance industry requires huge capital. The government wants to attract foreign companies with huge capital by authorizing 100% foreign investments.This strategy will increase competition for domestic giants like SBI, HDFC, ICICI, Tata and Birla, which currently dominate the sector.Some foreign companies, such as Allianz, which is reportedly on the verge of being split by its Indian partner Bajaj, may enter the Indian market independently.
What changes will the unified licensing system bring?
Domestic and foreign insurance companies will be happy to increase their investments as they will also have the opportunity to enter new segments.A single company will be able to offer all types of insurance coverage. Customers will no longer need to contact different companies to obtain different insurance.Life insurance companies will also be able to sell other products such as health coverage. On the contrary, general insurance companies will also be allowed to sell life insurance policies.
A major challenge: this is why India is an attractive market for foreign companies According to a report by US-based management consultancy McKenzie, the gross written premium of the Indian insurance sector in 2023 will be around Rs 11 lakh crore. The industry is growing at a compound growth rate (CAGR) of 11% since 2020. In terms of premium growth, India has left some Asian countries behind in recent years.