FDI in Insurance: The Union Cabinet has approved a bill to increase the FDI limit in the insurance sector from 74% to 100%, which will be introduced in the Winter Session of Parliament. The government believes that this step will increase investment in the insurance sector, new players will come and consumers will get better and cheaper services.
Big improvement in insurance sector
Union Finance Minister Nirmala Sitharaman had made this proposal in the budget for the financial year 2025–26, according to which foreign investment will be completely opened up by amending the Insurance Act 1938. So far, foreign investment worth Rs 82,000 crore has been attracted in the insurance sector, and this figure is likely to increase manifold with the new policy.
This bill includes provisions like reducing the minimum capital provision, arrangement for joint insurance license and changes in the LIC Act. This will give more freedom to the Board of Directors of LIC in taking decisions, especially in branch expansion and human resource management.
Competition will increase in the insurance market
The government aims to realize the plan of “Insurance for every citizen” by 2047, and this reform is considered a big step in that direction. This change is expected to increase employment, increase competition in the insurance market and bring transparency in financial services.
The proposed amendments in the Insurance Bill mainly focus on strengthening the interests of policyholders, enhancing their financial security and making it easier for more companies to enter the insurance market. This will accelerate economic growth and will also help in employment generation. These changes will help in increasing the efficiency of the insurance industry, improving ease of doing business and increasing the penetration of insurance.
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