The government on Wednesday released foreign investment norms for the insurance sector and clarified the four areas where such investment would be allowed while keeping the cap at 26% through the automatic route.
The department of industrial policy and promotion (DIPP) issued a press note in which it allowed the foreign institutional investments (FIIs) and investments by non-resident Indians (NRIs) along with foreign direct investment (FDI) within the 26% cap prevalent in the insurance sector.
While the earlier policy only talked about the insurance sector, the new guidelines now specify four sectors where insurance related FDI can come in. These are - insurance companies, insurance brokers, third-party administrators and surveyors and loss assessors.
Finance ministry sources said that there is no change in the FDI policy for the insurance sector and this is only a clarification.
“The insurance law and the Insurance Regulator Regulations have similar caps for FDI, FII and NRI investments. This press not is only consolidating the existing policy provisions,” said Akash Gupt, executive director at PWC.
“The companies bringing in foreign investment will have to obtain necessary licence from the
Insurance Regulatory and Development Authority (Irda) for undertaking prescribed activities,” the note said.
Insurance brokers are entities which for remuneration arrange insurance contracts with insurers or reinsurers on behalf of their clients. As per Irda, TPAs help in facilitating health insurance on behalf of insurers. Surveyors and loss assessors provide technical services to the insurance companies.
Incidentally, the Arvind Mayaram committee had recommended composite FDI cap of 49% fro the insurance sector from the current 26% within the norms stipulated by Irda.