The Indian government is poised to review foreign direct investment (FDI) limits across several key sectors, including insurance, defence, and plantations, as reported by The Economic Times.
Currently, the FDI cap stands at 74% for general and life insurance companies, while 100% FDI is permitted in insurance intermediaries. Despite the industry’s competitive landscape and the profitability of many life insurance firms, officials are considering a reassessment, aiming to facilitate smoother FDI inflows and ensure adherence to inter-ministerial timelines.
Calls for Tax Reduction on Health Insurance
In a related development, The Confederation of General Insurance Agents’ Associations of India has urged the government to slash the Goods & Services Tax (GST) on individual health insurance policies from 18% to 5%. This move is intended to boost the uptake of health insurance policies among the populace, thereby enhancing social security.
According to the association, the renewal rate of retail health insurance policies averages between 65% to 75%, highlighting affordability challenges due to frequent premium hikes and high GST rates.
“Insurance for All” Initiative by 2047
Meanwhile, the Insurance Brokers Association of India (IBAI) has collaborated with the Insurance Regulatory and Development Authority of India (IRDAI) to strategize towards achieving “insurance for all” by 2047. The initiative focuses on bolstering insurance awareness, fostering innovative insurance products, and enhancing career prospects within the industry.
IBAI’s recommendations to drive industry growth include recognizing insurance expenditure as a valid Corporate Social Responsibility (CSR) activity, expanding career opportunities for high school students in insurance, and promoting village adoption to elevate insurance literacy. Additionally, the association advocates for developing composite insurance products and advancing the Bima Trinity, a comprehensive insurance solution, to broaden coverage.
This comprehensive approach underscores India’s commitment to fortifying its insurance sector through strategic reforms and inclusive policies aimed at broader societal impact.
