insurance
New companies are going to enter the insurance sector. In fact, the Finance Ministry has proposed amendments like increasing the Foreign Direct Investment (FDI) limit in the insurance sector to 100 percent, reducing the paid up capital and making provision for simplifying the licensing rules. These amendments have been proposed to be made in various provisions of the Insurance Act, 1938. The Department of Financial Services (DFS) has sought comments from the public on these till December 10. Experts say that 100 percent FDI in the insurance sector will allow entry of new companies in the insurance sector. This will increase competition in this sector, which will benefit the policy taker. Insurance companies will provide policies at reasonable prices. Besides, facilities will also be increased.
Currently FDI limit is 74%
According to the proposal given by the government, the FDI limit in Indian insurance companies will be increased from 74 percent to 100 percent. DFS has sought public consultation for the second time on the proposed amendments to the Insurance Act 1938, Life Insurance Corporation Act 1956 and Insurance Regulatory and Development Authority Act, 1999. The Finance Ministry had earlier in December 2022 also invited comments on the proposed amendments to the Insurance Act, 1938 and the Insurance Regulatory Development Act, 1999. The Insurance Act, 1938 is the principal law providing the legislative framework for insurance in the country. According to an office memorandum issued on Tuesday, it is proposed to amend certain provisions of insurance laws to ensure access and affordability of insurance to citizens, promote the expansion and growth of the insurance industry and streamline business processes.
Target of ‘Insurance for all by 2047’
In this regard, a comprehensive review of the legislative framework governing the sector has been undertaken in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) and the industry. The memorandum said that the proposed amendments are mainly focused on promoting the interests of the insured, enhancing their financial security, facilitating the entry of more companies in the insurance market, promoting economic growth and employment generation. Such changes will help in increasing the efficiency of the insurance industry, enhancing ease of doing business and increasing insurance access, thereby achieving the goal of ‘Insurance for All by 2047’.
Currently there are 25 life insurance companies in the country
It provides the framework for the functioning of insurance business and regulates the relationship between the insurer, its policyholders, shareholders and IRDAI. Entry of more companies in this sector will not only increase penetration but will also create more employment across the country. At present there are 25 life insurance companies and 34 non-life or general insurance companies in the country.
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