MC EXCLUSIVE Insurance Amendment Bill likely in monsoon session, composite licenses and nod for 100% FDI on cards

While the specifics of the amendments are still uncertain, an increase in FDI to 100 percent in the insurance sector is highly likely to take place.

Composite licensing and the proposed increase in foreign direct investment (FDI) to 100 percent - key amendments under the Insurance Laws (Amendment) Bill, 2022 - are likely to be tabled during the upcoming monsoon session of Parliament, sources have told Moneycontrol.

Reuters reported on May 19 that India may introduce changes to FDI regulations affecting sectors 'from e-commerce to pharmaceuticals'.

However, sources added that while the specifics of the amendments are still uncertain, an increase in FDI to 100 percent in the insurance sector is highly likely to take place.

Composite licensing will allow insurance companies to sell both life and general insurance products under a single entity, streamlining operations for insurers.

Axis Max Life Insurance’s Chief Financial Officer Amrit Singh, while speaking to Moneycontrol after March quarter earnings had expressed hope that composite licensing would be implemented during the monsoon session, post which Axis Max Life plans to move forward with its proposed IPO simplification.

This comes at a time when Life Insurance Corporation of India (LIC) has reportedly signed a strategic deal with ManipalCigna Health Insurance, and while details of the agreement are yet to be disclosed, the move signals LIC’s intent to expand its footprint in health insurance.

During the Union Budget this year, Centre had announced a hike in the Foreign Direct Investment (FDI) limit to 100 percent to attract more global players and capital into Indian insurance. This move, also a part of the Insurance Act, is likely to be introduced in the upcoming session, said sources.

The Insurance Amendment Bill is also expected to simplify the capital structures of companies by proposing key reforms including composite licenses and increasing the foreign direct investment (FDI) cap. The amendments also propose flexible capital requirement by removing fixed minimum thresholds - currently at Rs 100 crore for life and general insurers and Rs 200 crore for reinsurance companies - as well as grant more autonomy to IRDAI.