The insurance regulatory and development authority of India (Irdai) is in the favour of allowing 100 per cent foreign direct investment in insurance intermediaries in addition to insurance brokers, according to sources.
The regulator is of the view that if insurance brokers can be allowed then the other insurance intermediaries like aggregator and third party administrators (TPA) may be considered for the same relaxation, the sources said.
In its response to the finance ministry with respect to increase in FDI limit in the insurance brokerage firm from the current level of 49 per cent, the IRDAI said all major international insurance brokers such as Marsh, JLT, Willis and Howden are already present in the country as the capital required for undertaking such activity is very less.
The increase in foreign direct investment (FDI) limit to 100 per cent will not result in significant inflow of foreign capital. According to estimates, the total capital infusion by three brokers after increasing the FDI limit is a mere Rs 4.78 crore.
The government is considering proposal to allow 100 per cent FDI in insurance broking and has set up a committee comprising secretaries of department of economic affairs, department of financial services and department of industrial policy and promotion (DIPP).
The Irdai has also argued that there is no dearth of capital and Indian investors are also looking at avenues to invest.
Industry experts are of the opinion that the insurance sector is being impacted due to weak distribution networks.