The government is gearing up to introduce major reforms in the insurance sector by allowing 100 percent foreign direct investment (FDI) in insurance companies, according to a Times of India report.

These changes are part of the upcoming Insurance Amendment Bill, which will be introduced in the winter session of Parliament.

If passed, the bill will mark a significant change in the insurance landscape in India, opening the door for global players to enter the market and allowing individual agents to sell policies from multiple insurance providers. insurance. This development deviates from the current rule which limits agents to a single association per type of insurance (life or general).

Currently, the FDI cap in the insurance sector is set at 74 percent, covering the life, general and health insurance sectors. The sector currently includes 24 life insurers, 26 general insurers, 6 standalone health insurers and one reinsurer: General Insurance Corporation.

By increasing the FDI cap to 100 percent, the government aims to attract well-capitalized global insurers capable of underwriting policies in this capital-intensive sector.

Additionally, the bill will provide insurance agents the flexibility to sell products from multiple companies, lifting the restriction that currently limits them to working with a single life insurer and a single general insurer. Although some agents have found ways to get around this rule by registering family members as agents for different companies, the proposed changes would formally allow agents to offer a wider range of insurance products.

These reforms are part of a broader strategy to boost insurance penetration in India, which remains low at around 4 percent. The policy aims to increase the number of insurers and offer consumers a wider selection of products, while making it easier for agents to navigate the market.

In addition to increasing the FDI cap, the Insurance Amendment Bill is expected to relax certain regulatory requirements, including those relating to company directors.

Additionally, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed allowing insurers to hold composite licenses, which could benefit companies like Life Insurance Corporation of India (LIC), allowing them to enter the health insurance market.

The government is also considering easing solvency requirements, which would free up capital for insurers to improve their operations and expand their offerings.