New Delhi, Nov 29: The central government has introduced a set of proposals aimed at reforming the insurance sector, including increasing the foreign direct investment (FDI) cap in Indian insurance companies from 74% to 100%. Additionally, the proposals would allow insurers to operate across multiple classes of insurance business and activities.
One key proposal is to reduce the requirement for Net Owned Funds (NOF) for foreign re-insurers, lowering the threshold from Rs 5,000 crore to Rs 1,000 crore. The government has invited public feedback on these proposed amendments to the Insurance Act, 1938, Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
The government also plans to amend certain provisions in insurance laws to enhance the accessibility and affordability of insurance for citizens. The aim is to promote the growth and development of the insurance industry while simplifying business processes. A comprehensive review of the sector’s legislative framework was conducted in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) and other industry stakeholders, according to the government’s office memorandum.
In addition, the government is proposing to empower the IRDAI to set lower entry capital requirements (not less than Rs 50 crore) for insurers targeting underserved or unserved market segments. The IRDAI has committed to achieving the goal of "Insurance for All" by 2047.
The public is encouraged to submit their comments on the proposed amendments by December 10 via email at [email protected].
A recent report by global consultancy firm McKinsey suggests that expanding insurance coverage to currently uninsured individuals and assets could save India up to USD 10 billion annually.
