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Published on 26/02/2020 1:50:25 PM | Source: Live Mint

Government notifies 100% FDI for insurance intermediaries

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NEW DELHI : The Department for Promotion of Industry and Internal Trade (DPIIT) has amended the foreign direct investment (FDI) policy to allow 100% Foreign Direct Investment (FDI) for insurance intermediaries, which includes insurance brooking, insurance companies, third party administrators, surveyors and loss assessors.

Insurance intermediaries are brokers or agents who liaise between insurance companies and customers.

Till now, FDI in the insurance sector was capped at 49% under the automatic route. According to the policy, FDI for insurance company is still capped at 49%.

The government’s latest decision to ease FDI norms for the insurance sector will enable foreign brokerage companies to buy stake in Indian companies. This will bring in global practices in the country, which will include new insurance products and selling strategy. As a result, the right kind of product will be sold to the right client.

Finance minister Nirmala Sitharaman in the Union Budget last year said that 100% FDI will be permitted for insurance intermediaries.

According to the policy that insurance intermediary with majority shareholding of foreign investors will have to be incorporated as a limited company under the provisions of the Companies Act 2013. At least one from among the chairman of the board of directors or the Chief Executive Officer (CEO) or principal officer or MD of the company shall be a resident Indian citizen, it said.

Besides, any non-insurance company, for instance, a bank with more than 50% revenue from non-insurance business will have adhere to respective FDI limit for that particular sector.

“FDI inflows into India have remained robust despite global headwinds. Global Foreign Direct Investment (FDI) flows slid by 13% in 2018, to $1.3 trillion from $ 1.5 trillion the previous year--the third consecutive annual decline, according to UNCTAD’s World Investment Report 2019… I propose to further consolidate the gains in order to make India a more attractive FDI destination," Sitharaman had said in the Budget speech in July last year.A