Insurance sector gets over 62% of $5.7 bn services sector FDI inflows in H1

The insurance sector received the highest foreign direct investment (FDI) in the services sector during the April–September period of FY25 (H1FY25), the Economic Survey 2024-25 said. The segment accrued more than 62 per cent of the $5.7 billion worth of equity inflows into the services sector.

 

This was followed by the financial sector, which received 18 per cent of the total FDI inflows in the services sector. The total FDI equity inflows in H1FY25 stood at $29.8 billion.

 

The insurance sector was opened to foreign investors with an FDI limit of up to 26 per cent in 2000. The limit was increased to 49 per cent in 2015 and to 74 per cent in 2021.

 

The Indian insurance market grew by 7.7 per cent Y-o-Y in FY24 to Rs 11.2 trillion, while insurance penetration dropped by 3.7 per cent from 4 per cent, compared to the global average of 7 per cent penetration, indicating a gap in coverage.

 

According to the survey, evolving customer expectations and emerging risks—such as climate change and geopolitical uncertainty—are key concerns. Meanwhile, increasing life expectancy and a growing elderly population pose underwriting risks to insurers. The insurance industry is also facing challenges related to mis-selling, delayed claims settlements, artificial intelligence (AI), cybersecurity, and third-party interactions.