Life insurers bat for 100% foreign investment in sector via automatic route
India has received nearly Rs 30,000 crore worth of FDI in the private sector insurance firms since 2015, when the government increased FDI limit from 26 per cent to 49 per cent
Life insurers have sought 100 per cent foreign direct investment (FDI) limit for the sector through automatic route, which can help the sector attract capital of Rs 40,000-60,000 crore.
India has received nearly Rs 30,000 crore worth of FDI in the private sector insurance firms since 2015, when the government increased FDI limit from 26 per cent to 49 per cent.
In a detailed presentation to the Insurance Regulatory and Development Authority of India (Irdai), life insurance companies pitched for 100 per cent FDI limit in the sector.
Investment under the automatic route does not require prior approval from the government.
The insurance regulator on December 2 invited views from all the companies to increase FDI limit in the sector and asked for their feedback by December 10.
The subject matter was further discussed in the Life Insurance Council meeting on December 13.
"The government will examine suggestions of further opening of FDI in aviation, media (animation, visual, gaming and comic) and insurance sectors in consultations with all the stakeholders," the Irdai said.
The life insurers said the government should allow both the options FDI and FII (foreign institutional investors) in opening the insurance sector to 100 per cent via the automatic route.
This will give insurance companies an option to decide on which route they would like to take (FDI or FII or a combination of the two), to increase the limit to 100 per cent, the insurers said in the letter, adding there should be no conditions for foreign investors for moving from 49 per cent to 100 per cent, such as restriction on voting rights and India ownership, among others.
If the limit is increased from 51 per cent to 100 per cent, another Rs 40,000- 60,000 crore of inflows are attainable, based on current valuations.
"Increase in FDI will help the country better technical know-how, better insurance penetration, and better training of stakeholders, etc. It will also help in higher settlement claims, better persistency and early claim reduction," Irdai said.