The insurance industry has seen significant growth during the COVID-19 pandemic. Until the covid-19 outbreak took place, the life insurance sector was growing at an 11-12% growth rate. Post-pandemic life insurance sector is growing at a rate of 18%. COVID-19 disrupted the Indian insurance market and created avenues for many higher future growth opportunities and reversed earlier gains. This growth is said to contribute to the country’s GDP significantly as the Indian Government is arms itself with more growth plans to drive the Indian Insurance sector further.
What the Insurers Need to Know?
The Indian Government is actively gearing up for making some landmark changes in the Indian insurance industry. The Government is planning to allow 100% FDI or Foreign Direct Investment in the Insurance business. This landmark change will be opening a lot of doors for the global players for independently entering the Indian Insurance market. Additionally, allowing the insurance agents to sell policies from multiple Insurance companies. This move is a significant exit from the current single association cap.
As the Government plans to make this change, this move forms a significant part of the Insurance Amendment Bill that is set to be discussed in the upcoming winter session of the parliament. The government is actively planning to amend the insurance sector for achieving the goal of “Insurance for All by 2047”.
Hop on to the next section to explore more!
How Increasing the New FDI Cap will be Adding Value to the Indian Insurance Market?
If you have been actively keeping your eyes on the current FDI in Indian insurance, then you will know that the current FDI celling for the insurance companies is standing at 74%. This includes the intermediaries who enjoy ease of restrictions. The sector currently has 26 general insurers, six standalone health insurers and one reinsurer- The General Insurance Corporation.
With the FDI cap being raised by 100% the Government aims to attract new players for strengthening the financial muscle required to underwrite policies in a capital-intensive industry. This significant measure is expected to compliment the domestic heavyweights such as HDFC, Tatas, and Birla’s, SBI, ICICI who are already dominating the insurance sector.
What’s More?
The Government is not justing planning to increase the FDI cap by 100% but also plans to allow agents for directly selling policies from multiple companies in order to streamline the market. Currently, agents can bypass restrictions by registering family members to work with other companies. This new rule will formalize this practice and will make it easier for agents to operate efficiently and transparently.
Conclusion
As the Indian Government is gearing towards making the Indian Insurance more strengthened with a strong financial muscle, it is taking steps towards achieving its long-term goal of ‘Insurance for All by 2047. The 100% FDI will enable the Indian insurance sector to thrive further given the widen scope of global players entering the market.
