Insurers may see hike in stakes post budgetary proposal

Tags: Insurance
With the budgetary proposal to hike foreign direct investment cap to 49 per cent from the existing 26 per cent in the private insurance sector, the general insurance industry is hopeful that their foreign partners will increase their stake.

"If the growth potential is realised, profitability would improve for non-life insurance companies. Their overseas JV partners who are haven here for over a decade would be interested in increasing their stake to 49 per cent," General Insurance Council Secretary General R Chandrasekaran told PTI.

Around Rs 3,000 crore of fresh capital investment is likely to happen in the sector over next two-three years and so far Rs 1,800 crore has already been invested into the sector.

"The budgetary measures are specifically positive for the insurance sector. This will bring in much needed long-term capital which can be effectively channelised to increase penetration and reach," ICICI Lombard managing director Bhargav Dasgupta said.

While corporate houses with JV in general insurance segment include the Tatas, Bharti, ICICI and HDFC, Reliance and L&T are without any foreign partners.

Currently, there are 22 non-life insurers in the country.

The health insurance sector is also expecting infusion of foreign capital after the budgetary announcement.

"We expect further capital investments to filter into multiple areas, including technology driving efficiency in customer service and distribution facilitating the governments agenda on enhancing financial inclusion," Cigna TTK Health Insurance managing director Sandeep Patel said.

Health insurers, which are five in number as of now, are likely to come up with innovative products.

"With 49 per cent FDI coupled with developments in healthcare industry over the next few years, health insurers are expected to come out innovative products," Chandrasekaran said.

The Insurance Act Amendment Bill, which is likely to be tabled in Parliament shortly, has proposals to relax minimum capital as well as earmark health insurance business as a separate class, he added.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Banks might be bracing for intense rate war for retail loans

    While select small banks have been slashing their deposit rates by five to 10 basis points over the past few weeks for short term adjustments to avoid

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

When too little could mean too late

The calamity in Jammu and Kashmir has once again shown ...

Purnendu Ghosh

Why art and science are natural partners

Art is qualitative and is generally associated with emotions. Science ...

Shona Adhikari

A toast to established and emerging talent

This week, our focus is on upcoming exhibitions in the ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture