The Confederation of Indian Industry (CII) today pitched for expeditious enactment of insurance Bill to hike the FDI in private insurance companies to 49 per cent, from the current 26 per cent, to raise the penetration level, particularly in the rural market.
Insurance penetration in rural and social sectors is marked by high risk and hence require more dynamic and efficient risk management systems, the industry chamber said in a statement.
"...Hence there is a strong need to raise FDI Cap in Insurance sector from the current 26 per cent to 49 per cent," CII said in its comments on the Insurance Laws (Amendment) Bill, 2008.
The Insurance Bill, when enacted, would allow raising the FDI cap for the industry to 49 per cent. However, it has been awaiting approval since 2008 as it was delayed by strong opposition from the Left parties.
The insurance sector already has joint ventures with several foreign companies like ERGO International AG, Prudential Plc, ING Group, Allianz and Aviva.
These companies would be able to increase their investments in their Indian joint ventures if the FDI limit is increased.
"Greater foreign investments would help in training and skills upgradation of the agents. Raising the FDI cap will enable expertise (skills) and know-how transfer that are generally not available under the current regime," CII said.
The industry chamber said currently there is a shortage of expertise in the Indian insurance industry (like actuarial, underwriting, claims management).
Further, CII has suggested that non-executive directors of a Corporate Agent be permitted to be the Director of Life Insurance Company.
"This would help regularise many cases where the promoter companies of the insurance companies have their own corporate agency like banks and finance companies," it said.
