In what could boost the insurance industry, increase its penetration and make the sector more competitive, the Union Budget 2019 proposed 100% foreign direct investment (FDI) for insurance intermediaries. Finance Minister Nirmala Sitharaman, while presenting the Budget, said that the government would examine suggestions of further opening up of FDI in various sectors, including insurance.
Liberalised FDI for insurance intermediaries augurs well for potential buyers as the same is expected to bring innovation in insurance distribution and best practices within the industry. With insurance brokers entrusted to manage public wealth, it will lead to greater sharing of know-how leading to better access to insurance products, which is the need of the hour.
It must be noted that currently only 49% of FDI is allowed for insurance intermediaries including insurance brokers, consultants, corporate agents, surveyors and loss assessors among others. The announcement from the Government is expected to attract global distribution insurance companies to set up their operations in the country, thus making the sector more competitive.
The intense competition in the sector would lead to crafting of better insurance products for customers in the coming days. As an insurance buyer, you will have more choice at your disposal and select the product that best meets your requirements. Also, insurers are expected to invest in technology and digital solutions, thus offering you a seamless experience.
It must be noted that despite opening up of the industry for private players almost two decades ago, insurance penetration continues to be pretty low in India. While the penetration is as low as 3% for life insurance, it’s 1% for general insurance. IRDAI data shows that there are more than 430 brokers including direct, composite and reinsurance brokers as on June 2018.
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