The government is considering permitting 100% foreign direct investment (FDI) in insurance, potentially making it easier for international insurers to enter the country. The finance ministry is planning to make adjustments to the insurance law during the current Parliament session, but the ultimate decision to table the changes will be made by the political executive. The finance ministry has not responded to the ideas. Debasish Panda, chairwoman of the IRDAI, has urged that India allow 100% FDI in insurance to attract more investments and enhance insurance penetration. In February, a panel of MPs backed the proposal, which was first suggested by India’s Insurance Regulatory and Development Authority. The new tab necessitates proper capital and solvency standards for qualifying organizations.
According to two official sources on Tuesday, the Indian government intends to change the insurance legislation during the current Parliamentary session in order to allow insurers to have a single license and increase the foreign direct investment (FDI) cap from 74% to 100%.
According to research firm Swiss Re Institute, a single license for insurers and a larger FDI limit might increase investments and enhance the country’s insurance penetration, which was 3.8% of GDP in 2023. Under a consolidated license, also known as a “composite license,” insurers will be able to offer health, life, and general insurance under one roof. Currently, general insurers are permitted to provide products ranging from health to marine, but life insurance companies are not permitted to market products like health insurance.
