12/12/2014 India: FDI ceiling hike to attract funds of US$8 bln by 2020 The expected increase in the ceiling on foreign investments in insurance companies is forecast to attract an additional capital of INR500 billion (US$8 billion) into the industry by 2020, according to the Secretary General of the Life Insurance Council, Mr V Manickam. An insurance amendment Bill has been submitted to the upper house of Parliament by the Select Committee which was reviewing the draft legislation. The Bill proposes to raise the foreign investment ceiling in insurance companies to 49% from the current level of 26%, among several measures. Mr Manickam, who was speaking to the Indo-Asian News Service, also said that around 300,000 jobs will be created because the number of insurance branch offices is expected to increase from 10,000 to 30,000, while the number of agents selling life insurance policies will double to four million from the present level of around two million as a result of the insurance reform. Mr Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services, said: “The total capital of the life insurance industry is now around INR300 billion of which 26% is the foreign component. On face value, a minimum of INR75 billion of additional funds is expected to flow into the market.” He does not expect more new players entering the Indian insurance market because all the major international players are already operating in the country. He said there will be some mergers and acquisitions happening at the lower end of the industry. Sharing the same view, Mr J Harinarayan, a former chairman of the Insurance Regulatory and Development Authority, told The Economic Times: “I do not expect a whole lot of new players coming into the Indian market for some time. What I think will happen is certainly capital will increase, and I do think there will be consolidation in the market within the country, and that is what we will see.” Mr Harinarayan added: “Initially, the 49% would really play out in the life sector. There are a lot more issues which need to be resolved and this 49% is important in resolving those issues. But in terms of growth prospects, the general insurance sector is proving very attractive in India and I would say that if there are new parties who are going to come in, they probably will be in the general insurance sector more so than in the life sector.” An industry executive told IANS that the non-life sector is not starved of funds.. “All the non-life players are adequately capitalised and are stable,” he said. At present, non-life insurance penetration in India stands at less than 1% while life insurance penetration is marginally above 3%. The Indian government plans to have the insurance Bill passed by lawmakers in the ongoing parliamentary sitting which ends on 23 December.
Posted on: Fri, 12 Dec 2014 15:59:40 +0000
Trending Topics
Recently Viewed Topics
© 2015