Insurance FDI: Investment logjam continues; no dollars yet

It has been 6 months since the government cleared 49 percent FDI in insurance, but the dollars are yet to flow in. What’s keeping the investors away?Insurance giants Axa and Standard Life may have announced their intention to hike stake in their Indian insurance ventures, but that's all it is, just intent. The biggest hurdle to these investments becoming a reality seems to be the issue of control. Foreign insurers argue that while the new FDI policy allows them to hike stake to 49 percent, it takes away the control they could exercise through affirmative and negative rights when the limit was 26 percent. That is because the new guidelines on control require these rights to be nullified, and vests control to the Board of the insurance company. However, the insurance regulator insists there are no apprehensions. The IRDA will be busy formalising the definition of control for the insurance industry for the next few weeks. The next few weeks will also see the regulator come out with final guidelines for reinsurance businesses in India. And only after this will the IRDA focus on the more complex guidelines to allow British reinsurer Lloyd’s to set up a branch in India.