Insurance Amendment Bill: Big changes expected, what it means for insurance sector in India

The central government is expected to table the Insurance Amendment Bill during the ongoing Winter Session of the Parliament. Touted as a game-changer for the insurance sector, the bill proposes sweeping reforms. According to the CNBC-TV18 report, here are the five proposed changes that may come into place:

100% FDI in insurance industry

The government is also planning to allow 100% foreign direct investment (FDI) in the insurance sector, increasing from the previous cap of 74%. If implemented, this will allow bigger players to enter into the market.

Notably, individual insurance agents might also be allowed to sell insurance policies from several companies as the restriction to limit to just one life and general insurance company might be lifted, as per a report by the Times of India.

Insurance Regulatory and Development Authority of India (IRDAI) chairman Debasish Panda recently promoted the "Insurance for All by 2047” vision which aligns with the government’s goal of increasing insurance coverage in the country.

The IRDAI is focused on transforming the insurance sector with changes in the regulatory framework, increasing accessibility to wider sections of the country and making use of technology and data in the sector for growth and stability, as highlighted by Panda in an interview with CNBC-TV18.

Insurance penetration in India was at 4.2% in 2021 as compared to the global average of 7%. Moreover, the sector primarily relies on the life insurance segment. The government increased the FDI limit in the sector to 74% from 49% in 2021. The FDI cap was surprisingly at 26% when privatisation was allowed in the sector in 2000.