The Indian government plans to amend insurance laws during the current session of Parliament to introduce a unified licence for insurers and raise the foreign direct investment (FDI) limit from 74% to 100%, according to two government sources on Tuesday.
The move to implement a single licence for insurers and increase the FDI cap could drive investments and enhance insurance penetration in India, which was 3.8% of GDP in 2023, according to the Swiss Re Institute.
A unified or “composite licence” would enable insurers to offer life, general, and health insurance under one entity. Currently, life insurers are not allowed to sell health insurance, while general insurers can offer a broader range of products, including health and marine insurance.
The Insurance Regulatory and Development Authority of India (IRDAI) first proposed the unified licence last year, and a panel of lawmakers supported the idea in February, while also recommending appropriate capital and solvency requirements for eligible companies.
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The government is also considering raising the FDI limit to 100% in insurance, which would make it easier for foreign insurers to enter the Indian market, the sources said.
Finance ministry officials are preparing to introduce amendments to the insurance law in the ongoing parliamentary session, although a final decision on presenting the changes will be made by the political leadership, according to the sources.
The finance ministry did not immediately comment on the matter. The sources, who spoke on condition of anonymity, did not reveal any specific conditions tied to the proposals.
Earlier this month, IRDAI Chairperson Debasish Panda stated that allowing 100% FDI in insurance would help attract more investments and increase insurance penetration in the country.