Finance Minister Mrs. Nirmala Sitharaman announced hiking of FDI limit in insurance sector from 49% to 74%. She also announced some amendments in the taxation of ULIP policies and proposed privatization of One Public Sector Insurance Company.
The hike in the FDI limit to 74% was cheered by the Industry and was termed as a bold move by the government. Though a hike in the FDI limit was expected but many did not expect it to be announced in this budget only. This will result in an inflow of more FDI in the Insurance sector and help in the expansion of the insurance industry and increase employment opportunities. The Indian partners in many insurance companies are cash-starved and this move will help to infuse more capital and help in increasing penetration in the country.
The Govt has not disclosed the name of the PSU company which will be privatized and it is still under suspense. This move will certainly invite the wrath of Employees Unions. IRDAI is giving more thrust for Standardisation of policies issued by both life or non-life insurers so that policyholders are not misled while purchasing the policies. The year 2021 will witness the launch of many new standardized products. On the sidelines of the 17th Annual Insurance Brokers’ Summit, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Dr. Subhash Chandra Khuntia stressed the need of developing Risk Management culture, standardization of policies, need for the digital revolution in the insurance industry, and increasing penetration in tier 2/3/4 cities. He also said the usage of mobile will be extremely useful in increasing insurance penetration and help in customer engagement. He stressed the need for creating a digital environment to facilitate the growth of the Insurance sector.
