Proposed Amendments
Fin min seeks comments on insurance act amendments, including 100% FDI
This story was originally published at 12:33 IST on 30 November 2024
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NEW DELHI – The Ministry of Finance's Department of Financial Services invited comments on a host of proposed amendments to Acts governing the insurance sector, including extending foreigners' equity ownership of Indian insurance companies to 100%. The current cap for foreign investment in insurance is 74%.
Foreign holdings can also include foreign portfolio investors, according to the amendment introduced in a new section under the Insurance Act, 1938. However, a body corporate formed or registered outside India cannot hold over 26% of the capital of an insurance co-operative society.
The government also proposed expanding the scope of an insurer to offer multiple classes of the insurance business, through various amendments to the existing norms. This includes life insurance, general insurance, health insurance, re-insurance and any other classes. According to the proposed amendments, some parts of personal accident insurance and travel insurance business will now be counted under health insurance.
The government has also proposed to lower the net owned funds requirements for foreign re-insurers down to INR 10 billion from INR 50 billion. In addition, it sought to empower the Insurance Regulatory and Development Authority of India to specify a lower entry capital for under-served insurance sectors, down to a minimum of INR 500 million.
One of the proposed amendments redefines the insurance business within the Insurance Act, 1938. Another allows insurers to enter activities related to or incidental to insurance, including a guarantee and indemnity business, and property in its possession arising from a claim.
"The proposed amendments primarily focus on promoting policyholders' interests, enhancing the financial security of the policyholders, facilitating entry of more players in insurance market leading to economic growth and employment generation, enhancing efficiencies of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve goal of 'Insurance for All by 2047'," the ministry said in an office memorandum on Tuesday. The department invited comments by Dec. 12 through a performa available on its website. End
Reported by Aaryan Khanna
Edited by Deepshikha Bhardwaj
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