Budget 2021 | Amendments required for liberalisation of insurance sector
Since the objective of the government is to bring an impetus to FDI inflow in insurance companies, stakeholders will now be very keen to learn the fresh terms and conditions that will act as riders to their ability to own and control insurance companies Indranath Bishnu February 04, 2021 / 09:00 AM IST
As part of the Budget presented by Finance Minister Nirmala Sitharaman on February 1, the government’s proposal to further liberalise foreign direct investment (FDI) in Indian insurance companies to up to 74 percent from the existing 49 percent cap was announced. This proposal is followed by the raise in FDI limits for investment in insurance intermediaries to up to 100 percent, which was announced by Sitharaman in her maiden Budget speech in July 2019, and effected subsequently in September 2019.
The control and acquisition of entities in India by foreign
investors and private equity funds (
PE Funds), is
regulated by the foreign investment norms specified by the Reserve
Bank of India (
RBI), the norms specified by the
Securities Exchange Board of India (
SEBI) (where
the entity is a listed entity), and any other laws/regulations
governing the business of the target entity. Entities engaged in
insurance business are required to follow additional norms
regarding foreign investment as specified by the Insurance
Regulatory and Development Authority of India
(
IRDAI). In this article we have set out the
frequently asked questions in relation to foreign investment in
Concerned over low level of insurance penetration in the country, IRDAI Chairman S C Khuntia on Wednesday said the regulator has asked insurance players to adopt one aspirational district each. The protection gap is 80-90 per cent in the country, so only 20 per cent people have any kind of insurance protection either in the form of life or general insurance, he said while addressing a virtual conference organised by economic think-tank NCAER. Life insurance penetration in the country is 3.6 per cent of the GDP, way below the global average of 7.13 per cent, and in case of general insurance it is even worse at 0.94 per cent of GDP, as against the world average of 2.88 per cent.
Indian insurance companies are likely to withstand the economic downturn exacerbated by the coronavirus pandemic, with general insurance premium growth in positive territory, Moody s Investors Service report has said. The report said that general insurance premium growth has been in the positive territory due to the persistent strong sales of health and protection cover. It noted that resilient sales of health and protection policies reflected the rising consumer awareness about these products during the pandemic, as well as regulator s actions in enabling the insurers to offer protection against the virus. The Indian insurers have also rapidly developed their digital offerings during the pandemic, the report added.
Private sector life insurer Bajaj Allianz Life on Tuesday said its assets under management have crossed the Rs 70,000-crore milestone by the end of December. With value-add products and meaningful improvements across customer services, our AUM has grown 79 per cent in the past 10 years to touch Rs 70,295 crore as of December 31, the company said in statement. It shows that the pandemic has not impacted the company s growth much instead it could maintain a steady growth, the insurer said. Bajaj Allianz Life Managing Director Tarun Chugh said, This milestone is a reflection of customers trust in our brand, and the collective efforts of our team to ensure that our customers life goals are on track, pandemic or no pandemic.