A ten-member committee will submit its report on FDI in insurance intermediaries within three months.
IRDA is considering allowing 100% FDI in insurance intermediaries and Third Party Administrators (TPAs). The insurance regulator has formed a ten-member committee to look into the matter related to FDI in insurance broking, distribution, TPA etc.
Currently, IRDA has put a cap of 26% on FDI in insurance intermediaries and TPAs. However, the Insurance Act, 1938 does not stipulate any such limits for insurance intermediaries.
Allowing 100% FDI in insurance intermediaries may bring technology and innovations in the financial distribution space, say experts. Pankaj Mathpal of Optima Money is of the opinion that the move will bring new capacities, technology and boost investments in financial distribution business.
Suresh Sadagopan of Ladder7 Financial Advisories expects that the move to help bring an international exposure to the domestic market. He says, “Insurance brokers represent interest of policyholders. A 100% FDI in this space may benefits investors with world class service. Also, it will lead to increase in competition among intermediaries which will benefit investors.”
IRDA said that it has received feedback from stakeholders to consider increasing FDI in insurance brokers from 26% to 100%. In a circular, the regulator said that it can remove the cap even without making any amendment to the Insurance Act. “This does not require any amendment to the Insurance Act 1938. Any such increase in foreign holding of an insurance intermediaries/TPA would, however, require amendment to the regulation notified by the IRDA,” said the regulator.
The committee will submit its report within three months after examining the case for increasing FDI in insurance entities, evaluating implication of this on industry and studying the international practices in this regard.
Suresh Mathur, Senior Joint Director, IRDA has been appointed as chairman while DS Murthy, Senior Assistant Director, IRDA will act as a secretary of the committee. Other members will be Mamta Suri, Joint Director, IRDA, R Chandrasekaran, Secretary General, GIC, V Manickam, Secretary General, LIC, Joydeep Roy, CEO, L&T General Insurance, N Mohan, General Manager, General Insurance Corporation, Deepak Kinger, EVP ICICI Prudential Life Insurance, SL Kadel, President, Insurance Brokers Association of India, Praveen Vashisht, CEO Howden Insurance Brokers.