A hike in FDI cap in insurance sector to 49 per cent from the current 26 per cent can help India emerge as a reinsurance hub in Asia, say industry experts.
A Parliamentary Committee, examining the Bill on raising the FDI cap in insurance sector to 49 per cent, will be presenting its report on December 8.
India could become an insurance hub if the government proposal on FDI hike in the key sector comes through and it comes out with right regulation and infrastructure, they said.
"In economic terms, India is at a turning point in its history, experiencing a renaissance politically, commercially, culturally. While GDP globally is flat, the IMF recently has revised India's forecasts upwards to 5.6 per cent," Lloyd's Chairman John Nelson has said.
He was speaking at the first-ever Indian International Insurance Summit at London organised recently by Asia Insurance Post and Indian Merchants' Chambers.
"Most importantly, the new government has already demonstrated that it is open to economic reform to encourage business to become outward looking and to modernise itself," he said.
Significant Indian risks include earthquake, drought, storm and flood, and this year we have recently witnessed devastating flood events in Kashmir and Jammu, followed by severe losses from Cyclones Hudhud and Nilofer, Nelson said.
"Putting this in numerical terms, our research shows a 1 per cent rise in insurance penetration translates into a 13 per cent reduction in uninsured losses - a 22 per cent reduction in the taxpayer contribution following a disaster - and increased investment equivalent of 2 per cent of national GDP. "We see examples of this virtuous circle played out in many economies," he explained.
At present, non-life insurance penetration in India is under 1 per cent of GDP (0.8 per cent).
GIC Re General Manager Alice Vaidyan said India has potential to emerge as a regional insurance hub. "The Indian markets have been the top performers in Asia Pacific region."
"India could benefit from the expertise of the London insurance industry," New India Assurance Director and General Manager Sanath Kumar said at the summit.
Swiss Re Global Partnerships Chairman Martyn Parker said the Indian Government should allow opening of local branches of international re-insurers.
