Intermediary services include insurance broking, third party administrators, surveyors and loss assessors.
Sources said that there is a need to de-link the FDI cap in insurance intermediaries from insurance companies.
Representations have been made to the government that these intermediary services should be treated at par with other financial services intermediaries, where 100 per cent foreign investment is permitted.
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.
Insurance penetration in the country was over 3.4 per cent against the world average of 6.2 per cent.