LIC backs 100% FDI in insurance, composite licencing good for sector

On the issue of further stake sale of government holding in LIC, sources said any decision on this will be taken by DIPAM.

State-run Life Insurance Corporation (LIC) has no objections to Centre allowing 100% FDI in the insurance sector, and has sent its suggestions on the matter to the government, sources close to the development informed Moneycontrol on December 9, on condition of anonymity.

LIC is believed to be of the view that composite licencing will be good for the insurance sector and India's largest insurer does not have any objections in this regard too. The provisions of seeking a composite licencing will not be mandatory on players in the industry, sources added.

The Foreign Direct Investment (FDI) limit in insurance is likely be raised to 100% from current 74%, Network18 has learnt in recent past through sources who wished not to be identified. Insurance companies are also likely to be allowed composite licences, with an amendment bill to address these aspects likely before the floor of the House.

On the issue of further stake sale of government holding in LIC, sources said any decision on this matter will be taken by DIPAM alone.

The insurance regulator had been voicing the need for this in recent past, which will allow general as well as life insurers to diversify their product portfolio. A unified or 'composite' licence allow insurers to provide life, general as well as health insurance policies under one entity. At present, life insurers cannot sell health insurance, and vice versa.

It is also possible that one of the provisions could pave way for insurance agents to be able to sell policies of various companies to the prospective buyer.

LIC's MD and CEO Siddhartha Mohanty has said the the insurer has been scouting for opportunities to enter the health insurance segment. "Our groundwork is underway, and within this financial year, we expect to acquire a stake in an existing standalone health insurance provider," he told analysts during the earnings call on November 8.