New Delhi: In order to increase the reach of insurance in the country, the Finance Ministry is considering changes in the insurance laws including reduction in the minimum capital requirement.
Insurance penetration in India increased from 3.76% in 2019-20 to 4.2% in 2020-21, registering a growth of 11.7%. Insurance penetration, measured as a percentage of insurance premiums to GDP, showed a decent growth during the year, mainly due to the outbreak of COVID-19.
The ministry is conducting a comprehensive review of insurance actLooking at 1938 and making relevant changes to help propel the development of the region, sources said, the linking process is at an early stage.
Sources said that one of the provisions being considered is to reduce the minimum capital requirement for setting up an insurance business to Rs 100 crore.
The easier capital requirement will allow the entry of various insurance companies into the banking sector, which has categories such as universal banks, small finance banks and payments banks.
Sources said with the ease of entry capital norms, there could be entry of companies focusing on micro insurance, agricultural insurance or insurance firms with a sectoral approach.
So the solvency margin requirement for them will also be different, but without compromising the interests of the policyholders, the sources said.
The entry of more sportspersons will not only boost the penetration but also generate more employment in the country.
At present, there are 24 life insurance companies and 31 non-life or general insurance companies, which include niche players such as Agricultural Insurance Company of India Limited And ECGC Limited,
Last year, the government amended the Insurance Act to allow foreign holding in insurance companies to be increased from 49% to 74%. In addition, Parliament The General Insurance Business (Nationalisation) Amendment Bill, 2021 was passed, allowing the central government to hold less than 51% of the equity capital in a specified insurer, paving the way for privatization.
In 2015, the Insurance Act was amended to increase the foreign investment limit from 26% to 49%. All these amendments have led to exponential growth since the privatization of the insurance sector.
According to a study, India is likely to become the world’s sixth largest insurance market in the next 10 years, supported by regulatory push and rapid economic expansion.
Total insurance premiums in India will grow at an average rate of 14% per annum in nominal local currency terms over the next decade, making India the 6th largest in terms of total premium volume by 2032, the 10th largest in 2021 .
Both life and non-life insurance companies collected premium of Rs 8.2 lakh crore during 2020-21.
Insurance penetration in India increased from 3.76% in 2019-20 to 4.2% in 2020-21, registering a growth of 11.7%. Insurance penetration, measured as a percentage of insurance premiums to GDP, showed a decent growth during the year, mainly due to the outbreak of COVID-19.
The ministry is conducting a comprehensive review of insurance actLooking at 1938 and making relevant changes to help propel the development of the region, sources said, the linking process is at an early stage.
Sources said that one of the provisions being considered is to reduce the minimum capital requirement for setting up an insurance business to Rs 100 crore.
The easier capital requirement will allow the entry of various insurance companies into the banking sector, which has categories such as universal banks, small finance banks and payments banks.
Sources said with the ease of entry capital norms, there could be entry of companies focusing on micro insurance, agricultural insurance or insurance firms with a sectoral approach.
So the solvency margin requirement for them will also be different, but without compromising the interests of the policyholders, the sources said.
The entry of more sportspersons will not only boost the penetration but also generate more employment in the country.
At present, there are 24 life insurance companies and 31 non-life or general insurance companies, which include niche players such as Agricultural Insurance Company of India Limited And ECGC Limited,
Last year, the government amended the Insurance Act to allow foreign holding in insurance companies to be increased from 49% to 74%. In addition, Parliament The General Insurance Business (Nationalisation) Amendment Bill, 2021 was passed, allowing the central government to hold less than 51% of the equity capital in a specified insurer, paving the way for privatization.
In 2015, the Insurance Act was amended to increase the foreign investment limit from 26% to 49%. All these amendments have led to exponential growth since the privatization of the insurance sector.
According to a study, India is likely to become the world’s sixth largest insurance market in the next 10 years, supported by regulatory push and rapid economic expansion.
Total insurance premiums in India will grow at an average rate of 14% per annum in nominal local currency terms over the next decade, making India the 6th largest in terms of total premium volume by 2032, the 10th largest in 2021 .
Both life and non-life insurance companies collected premium of Rs 8.2 lakh crore during 2020-21.