India:Govt plans 100% foreign-held insurance broking firms

The Indian government plans to abolish the 49% ceiling on foreign direct investment (FDI) in insurance broking, and allow 100% foreign ownership in the segment, to inject impetus to the insurance sector and to attract more funds.

“The government is in principle ready to take up an issue that is for the betterment of the sector… This matter is also being examined,” Press Trust of India reported, citing an official of the Department of Industrial Policy and Promotion (DIPP).

Currently, foreign investors are allowed to hold up to 49% of shares in insurance brokers, insurers, third-party administrators, surveyors and loss assessors in India.

Broking firms recently requested the government to treat insurance brokers on par with other financial services intermediaries where wholly foreign-owned entities are allowed.

“It is a win-win situation for the insurance firms and the segment, since it will not only bring in technology but also professionalism,” said Mr Charanjit Attra, Partnerof EY Global, commenting on the government's plan.

Industry experts say that the insurance sector is being impeded by weak distribution networks.