After a lengthy political logjam, the amendment to the Insurance Act 1938 was approved on March 23, 2015 (and made effective from December 26, 2014). The amendment, amongst other changes, increased the foreign investment limit in an insurance company (including insurance intermediaries, such as insurance brokers) from 26 per cent to 49 per cent.
The deal street is now witnessing a fair amount of M&A activity in the insurance sector. In the last three to four months, some foreign partners have completed the stepping up of their shareholding in their existing insurance joint ventures and several more have announced their intention to increase their existing shareholding. Some private equity investments and plans of some insurance companies to tap into capital markets have also been reported.
