insurance sector New companies are going to enter. In fact, the Finance Ministry has proposed amendments such as increasing the Foreign Direct Investment (FDI) limit in the insurance sector to 100 per cent, reducing paid-up capital and providing for simplification of licensing norms. These amendments are proposed to be made to several provisions of the Insurance Act of 1938. The Department of Financial Services (DFS) has requested public comments on these until December 10. Experts say that 100 per cent FDI in the insurance sector will allow entry of new companies in the insurance sector. This will increase competition in this sector, which will benefit the policy maker. Insurance companies will offer policies at reasonable prices. In addition, the facilities will also be expanded.
Currently the FDI limit is 74%
As per the government’s proposal, the FDI limit in Indian insurance companies will be increased from 74 per cent to 100 per cent. DFS has requested public consultation for the second time on proposed amendments to the Insurance Act 1938, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999. Earlier in December 2022, the Ministry of Finance had also sought comments on the proposed amendments to the Insurance Act of 1938 and the Insurance Regulatory Development Act of 1999. The Insurance Act, 1938 is the primary law that establishes the legislative framework for insurance in the country. According to an office memorandum issued on Tuesday, certain provisions of insurance laws are proposed to be amended to ensure access and affordability of insurance to citizens, promote the expansion and growth of the insurance industry, and streamline business processes. .
‘Insurance for all by 2047’ goal
In this regard, a comprehensive review of the legislative framework governing the sector has been carried out in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) and the industry. The memorandum says the proposed amendments mainly focus on promoting the interests of policyholders, improving their financial security, facilitating the entry of more companies into the insurance market, promoting economic growth and employment generation. These changes will help increase the efficiency of the insurance industry, improve the ease of doing business and increase access to insurance, thus achieving the goal of “Insurance for all by 2047”.
There are currently 25 life insurance companies in the country.
It provides the framework for the functioning of the insurance business and regulates the relationship between the insurer, its policyholders, shareholders and IRDAI. Entry of more companies in this sector will not only increase penetration but also create more employment across the country. Currently, there are 25 life insurance companies and 34 general or non-life insurance companies in the country.
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