India Raises FDI Limit in Insurance

India has passed a new law to make it easier for foreign companies to invest in its insurance sector.

The law allows foreign companies to own 100% of an Indian insurance company, up from 74% before.

It also gives more power to the insurance regulator, IRDAI, to protect policyholders.

The law aims to attract more foreign investment and improve the insurance industry in India.

However, it is not clear if this will be enough to attract more foreign investors, as the insurance industry in India faces challenges like low profitability and poor customer experiences.

The regulator needs to use its new powers effectively to make a difference.

Experts believe that the new FDI limit may encourage more global players to explore India, but translating that interest into meaningful scale will depend on how effectively new entrants can navigate the distribution landscape.

The proposed changes in the Net Owned Funds (NOF) for foreign reinsurers to Rs 1,000 crore from Rs 5,000 crore are likely to bring them on par with the IFSC Insurance Office (IIO) in GIFT City and might evince some interest from foreign reinsurers to enter through the mainland route.