New Delhi: With the UPA winning a decisive mandate without the Left nagging, insurance industry feels that the new government could bring in legislation for raising foreign direct investment cap in the sector to 49%.
The bill to amend insurance laws to raise the FDI limit to 49% is pending in the Rajya Sabha and issue would be taken up by the Upper House after receipt of the report of the Standing Committee.
Earlier, the proposal could not go through because of stiff resistance from the Left parties.
“We would expect the new government at the centre to continue with the financial reforms to further liberalise the insurance sector,” MetLife India Insurance managing director Rajesh Relan said.
The government should push forward the Insurance Amendment Bill, which has been pending Parliamentary approval, as it will provide much needed impetus to the sector, he said.
Increase in FDI would help customers with better products, more options and better service levels from the insurance players in the industry, he said, adding that it would also help increase the needed penetration level for insurance in the country.
DLF Pramerica Life Insurance MD Kapil Mehta said the government should now be pushing the insurance sector reforms.
“I think with the new government in place things should move faster,” Mehta said.
Allianz India country manager Kamesh Goyal said, “It is a good news. This Government (UPA) brought in reforms by introducing Insurance Amendment Bill in Parliament a few months back. The Bill will now go through.”
The positive thing of the Congress coming in power again is that there will be continuity in the reforms. The government will push forward more reforms, Tata AIG General Insurance MD and CEO Gaurav Garg said.
Pitching for faster clearance of the insurance bill, Max India Group Chairman Analjit Singh said reforms in the financial services sector and change in the FDI norms for insurance are needed to bolster the economy.
Max India is the majority partner in private life insurance firm Max New York Life Insurance as well as proposed health insurance company Max Bupa Health Insurance.
Life Insurance Council secretary general S.B. Mathur hoped that the Bill (Insurance) would be passed soon to enable flow of more FDI in the insurance sector.
“This is a clear and stable government which will work freely. As Parliament will convene, the insurance bill will be cleared soon. Now, the economic reforms will also be pushed forward, he said.
Last year, the government tabled the insurance reforms bill in the Rajya Sabha aiming increasing the cap on FDI in private companies in the sector to 49% from existing 26%.
The minimum investment limit for health insurance companies is proposed to be fixed at Rs50 crore. At present, the companies entering the insurance business -- life or general insurance -- are required to have a minimum paid-up capital of Rs100 crore.
The move to lower the investment limit is expected to encourage companies with less capital to launch health insurance business and increase the penetration of this important segment.