Govt clarifies FII, NRI investment policy in insurance sector

The Congress led UPA government has cleared that the 26% cap on foreign investment in the insurance sector will also be applicable to intermediaries such as brokers, third party administrators and surveyors.

As per a press note, released by the Department of Industrial Policy and Promotion on Wednesday, in case of insurance companies, the 26 % cap will include foreign direct investment (FDI), foreign institutional investments (FIIs) and investments from non-resident Indians (NRIs) as well.

The earlier policy allowed up to 26% FDI in the insurance sector through the automatic route without clarifying if this included other foreign investments such as FII and NRI as well.

India's insurance regulator has set up a committee to study the option of allowing 100 percent FDI in insurance intermediaries, third-party administrators, surveyors and loss assessors. But action on this, too, would have to wait.

The Insurance Regulatory and Development Authority (IRDA), has formed a committee to look into a possibility to allow 100% FDI in insurance intermediaries such as brokers, third-party administrators (TPAs), surveyors and loss assessors.

The Insurance (Amendment) Bill, which proposes to raise FDI in the sector to 49 %, has already been approved by the Union Cabinet. But, it's been pending in the Rajya Sabha since December 2008, as the Standing Committee on Finance, headed by senior BJP leader Yashwant Sinha, didn't support it. The Committee, in its report, had argued that raising the FDI ceiling to 49% would expose the sector to global vulnerability.

Source: http://www.insuringindia.com