Insurance Bill allowing 100% FDI, other changes awaits cabinet nod: Report

The bill proposes removing the Rs 100 crore minimum paid-up equity capital requirement for life, general, and health insurance businesses.

The Insurance Amendment Bill, which seeks to raise the foreign direct investment (FDI) limit in the sector to 100 percent, is expected to be introduced in Parliament soon, pending approval at the highest levels, The Economic Times has reported.

The proposed amendments aim to raise the FDI cap in the insurance sector from 74 to 100 percent and relax capital requirements for insurers. A key provision of the bill is the introduction of a composite licence, allowing companies to offer life, non-life, and health insurance products under a single licence, the report said.

A government official told ET that the draft of the bill is ready and once final approvals are obtained, it will be presented to the cabinet before being listed in Parliament. The Insurance Regulatory and Development Authority of India (IRDAI) has long advocated for 100 percent FDI in the sector, citing the need for significant capital to meet the government's goal of "insurance for all" by 2047.

In addition to the FDI changes, the bill proposes removing the Rs 100-crore minimum paid-up equity capital requirement for life, general and health insurance businesses. This is intended to make it easier for new players to enter the market and increase competition, thereby improving the financial security of policyholders and enhancing the overall efficiency of the industry.

The report added that the amendments also aim to expand the range of insurers eligible for registration, with minimum capital requirements to be set by IRDAI based on different classes of insurers. These changes are designed to encourage more players in the market, boosting economic growth and employment opportunities.

The bill has been in the works since 2022 when the government sought public feedback on proposed changes to the Insurance Act, 1938, and the IRDAI Act, 1999. If the Cabinet clears the bill, it is expected to be introduced in the current session of Parliament.