Representative image of an insurance policy document.
Credit: iStock Photo
New Delhi: The Indian government plans to amend insurance laws in the ongoing session of Parliament to facilitate a unified licence for insurers and raise the foreign direct investment (FDI) limit to 100 per cent from 74 per cent, two government sources said on Tuesday.
A single licence for insurers and higher FDI limit could boost investments and improve insurance penetration in the country, which stood at 3.8 per cent of GDP in 2023 according to research firm Swiss Re Institute.
A unified licence or "composite licence" will allow insurers to provide life, general and health insurance under a single entity.
Currently, life insurance companies cannot sell products such as health insurance, while general insurers are allowed to sell products ranging from health to marine.
The proposal for a unified licence was first suggested last year by the Insurance Regulatory and Development Authority of India (IRDAI), the country's insurance regulator.
A panel of lawmakers had backed the idea in February, but called for adequate capital and solvency requirements for eligible entities.
The government is also looking to allow 100 per cent FDI in insurance, a move which could facilitate easier entry for foreign insurers, the sources said.
Officials at the country's finance ministry are preparing to introduce amendments to the insurance law in the ongoing session of Parliament, the sources said. However, a final call to table the changes will be taken by the political executive, they said.
The finance ministry did not immediately respond to a request for comment. The sources declined to share any conditions that will be linked to the proposals, and asked not to be identified because they are not authorised to speak to the media.
Earlier this month, IRDAI chairperson Debasish Panda said India should allow 100 per cent FDI in insurance to attract more investments and increase insurance penetration in the country.