Insurance stocks under pressure as government plans 100% FDI in sector

This fall in stocks comes on the back of a news report suggesting that the government is set to allow 100% foreign direct investment (FDI) in the insurance sector.

As per the report, the government will also ease restrictions on insurance agents.

The Winter Session is scheduled to begin on November 25 and last until December 20.

FDI ceiling increase

At present, insurance companies' FDI ceiling is 74%. However, this bill will remove the cap and allow 100% FDI.

With this, large foreign insurance companies can enter the domestic market.

Furthermore, insurance agents will be allowed to sell insurance policies from multiple companies, Currently, one individual can hawk policies from one general and one life insurer.

Meanwhile, the stock of HDFC life insurance hit an intraday low of ₹668.30, down 3.22% on the NSE, and those of Star Health slumped to an intraday low of 2.33%.

The ICICI Prudential Life Insurance shares were trading at a low of 3.59%.

HDFC life insurance shares closed at ₹680.40, down 1.15%.

The stocks of ICICI Prudential Life Insurance closed at ₹685.20, down 1.15%, and those of Star Health Insurance closed in the red at ₹462.10, down 0.3%

The government’s goal with the Insurance Amendment Bill is to increase insurance penetration in the country, which is currently at 4%.