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Insurance
29-Nov-24
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Govt. proposes raise FDI limit to 100% in insurance sector, seeks comments
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The central government has introduced several proposals aimed at the insurance sector, notably the increase of the Foreign Direct Investment (FDI) limit in Indian insurance companies from 74 percent to 100 percent. Additionally, the proposals include allowing insurers to engage in multiple classes of insurance business and activities.
Moreover, the government suggests reducing the Net Owned Funds requirement for foreign re-insurers from Rs 5,000 crore to Rs 1,000 crore.
Public feedback is being sought on the proposed amendments to the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.
The government also aims to amend certain provisions of insurance legislation to enhance the accessibility and affordability of insurance for citizens, promote the growth and development of the insurance industry, and simplify business operations.
According to a government office memorandum, a thorough review of the legislative framework governing the sector has been conducted in collaboration with the Insurance Regulatory and Development Authority of India (IRDAI) and industry stakeholders.
Additionally, the government plans to empower the insurance regulator, IRDAI, to set a lower entry capital requirement (not less than Rs 50 crores) for underserved or unserved market segments.
The IRDAI has committed to achieving the goal of "Insurance for All" by the year 2047. The public is encouraged to submit their comments on the proposed amendments by December 10 via email at consultation-dfs@gov.in.
In a related note, a recent report from global consultancy firm McKinsey indicates that India could potentially save approximately USD 10 billion annually by increasing insurance coverage for individuals and assets that remain uninsured.
A considerable number of Indian citizens and insurable assets are currently without insurance, which heightens the risk of substantial out-of-pocket expenses and places a significant strain on public finances.
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