The government is considering exempting insurance intermediaries, including brokers, from the FDI limit. The insurance regulator had at some point decided to apply the limits applicable to insurance firms to other companies across the sector after the government has allowed reinsurance firms to set up 100%-owned units in the form of domestic branches. Several of the international brokers are keen to follow their clients in India but are not interested in a minority stake company.
Berkshire Hathaway had set up a wholly owned company for distribution of motor insurance some years back but subsequently the Insurance Regulatory and Development Authority of India (IRDAI) decided that even corporate agents should be subjected to the FDI limits. Now, the thinking is to go back to the original stance of allowing 100% ownership.
The other reason for considering 100% FDI for broking firms is that insurance broking is not a capital-intensive business and most of the work is advisory in nature. Even if the premium is sourced by a multinational broking firm, the policy is issued by a domestic insurance company and there is no loss of foreign exchange.
