Unified License FDI Limit: Unified License may get green signal in the House, know whether the plan for foreign investment…

Unified Licence FDI Limit: The government is planning to amend the insurance law in the current session of Parliament. According to officials, mainly two changes are proposed. Unified license for insurance companies and increasing the foreign direct investment (FDI) limit in this sector from the current 74% to 100%.

If these changes are made then the reach of insurance in the country will increase. According to research firm Swiss Re Institute, currently insurance penetration in India is only 3.8%. A unified license is an overall license. With this, a single company will be able to offer life, general and health insurance products.

At present, life insurance companies cannot sell products like health cover. However, general insurance companies are allowed to sell health to marine insurance policies. The government wants to remove this complexity.

What will be the benefit of allowing 100% FDI?

The insurance industry requires huge capital. The government wants to attract foreign companies with big capital by allowing 100% foreign investment.

This strategy will increase competition for domestic giants like SBI, HDFC, ICICI, Tata and Birla, which currently dominate the sector.

Some foreign companies like Allianz, which is reportedly going to be spun off from Indian partner Bajaj, may enter the Indian market independently.

What changes will the unified licensing system bring? (Unified License FDI Limit)

Domestic and foreign insurance companies will be excited to increase investment as they will get a chance to enter new areas as well.

A single company will be able to provide all types of insurance covers. Customers will not need to go to different companies for different insurance.

Life insurance companies will also be able to sell other products like health cover. In contrast, general insurance companies will also be allowed to sell life insurance policies.

India is an attractive market for foreign companies because (Unified License FDI Limit)

According to a report by American management consulting firm McKenzie, the gross written premium of the Indian insurance industry in 2023 was about Rs 11 lakh crore. The industry is seeing a compound annual growth (CAGR) of 11% from 2020. In terms of premium growth, India has overtaken some Asian countries in recent years.