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Govt may allow 100 per cent FDI in insurance broking to attract more funds

The FDI policy, at present, allows 49 per cent foreign investment in the insurance sector

Press Trust of India  |  New Delhi 

Insurance
Representational image. Photo: iStock

The government is considering allowing 100 per cent in broking with a view to giving a boost to the sector and attracting more funds.

The policy, at present, allows 49 per cent foreign in the sector that encompasses broking, insurance companies, third party administrators, surveyors and loss assessors as defined by the Department of Industrial Policy and Promotion.

An official said that representations have been made to the government that insurance brokers should be treated at par with other financial services intermediaries, where 100 per cent is permitted.

"Insurance broking is like any other financial or commodity broking services. The issue was recently discussed in an inter-ministerial meeting. The government is positively looking at the matter," the official said.

The official, however, clarified that the cap for insurance companies would remain at 49 per cent.

Further, industry experts stated that the insurance sector is being impacted due to weak distribution networks.

There is a need to strengthen the distribution network to support the sector as a whole.

According to Prudent Insurance Brokers Director Pavanjit Singh Dhingra, the decision would help strengthen distribution as it is not high capital intensive business.

The removal of foreign limit will encourage more players in the markets with high technology, he said, adding it will help increase insurance penetration as India has low penetration.

Insurance penetration in the country was 3.4 per cent in 2015 against the world average of 6.2 per cent. It was 3.3 per cent in the country in 2014.

First Published: Tue, March 21 2017. 14:34 IST
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