New Delhi: The Reserve Bank of India (RBI) on Thursday said overseas investors, including foreign portfolio investors (FPIs) and Non Resident Indians (NRIs), can invest up to 26% in insurance and allied activities through the automatic route.

“Effective from February 4, 2014, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26% under automatic route shall be permitted in insurance sector," RBI said in a circular on Thursday.

Earlier in February, the government had allowed 26% foreign investment in activities related to insurance like broking, third party administrators and surveyors and allowed FIIs and NRIs to invest in insurers within the stipulated cap.

In case of insurance companies, the 26% cap will include foreign direct investment (FDI) and investments from foreign institutional investors (FIIs) and Non-Resident Indians (NRIs), said a press note issued by Department Of Industrial Policy and Promotion (DIPP). Earlier, only FDI under the automatic route was allowed in insurance companies.

FPIs encompass all FIIs, their sub-accounts and qualified foreign investors (QFI) under a new regime that came into force on 1 June. Under the new norms, 26% foreign investment including FDI, FII and NRI will be allowed under the automatic route in insurance companies, insurance brokers, third party administrators (TPAs), surveyors and loss assessees.

Companies bringing in foreign investment will, however, have to obtain necessary licence from the Insurance Regulatory and Development Authority (IRDA) for undertaking prescribed activities.

Insurance brokers are entities which for remuneration arrange insurance contracts with insurers or re-insurers on behalf of their clients.

The TPAs help in facilitating health insurance on behalf of insurers. Surveyors and loss assessors provide technical services to the insurance companies. All these entities are required to obtain a licence from the IRDA for undertaking specific activities.