The government is mulling to permit 100 percent foreign direct investment (FDI) in insurance intermediaries in a bid to give a fillip to the sector and attracting additional funds. Intermediary services encompasses of insurance broking, third party administrators, surveyors and loss assessors.
Presently, the FDI policy allows 49 percent foreign investment in the insurance sector, which includes insurance intermediaries. There is a need to de-link the FDI cap in insurance intermediaries from insurance companies. Representations have been made to the government that these intermediary services should be treated at par with other financial services intermediaries, where 100 percent FDI is allowed.
Further, industry experts stated that the insurance sector is being impacted due to weak distribution networks. There is a need to strengthen the distribution network to support the sector as a whole. Besides, India's current insurance penetration rate stands at 3.42%, far below the global average of 6.2%. It was 3.3% in the country in 2014.