Budget 2019 India: India’s insurance gap worth $27 billion (in absolute terms) is the second largest in the world after China's over $76 billion.
Budget 2019 India: Among measures to boost foreign direct investment (FDI) in India, finance minister Nirmala Sitharaman in her maiden budget speech proposed permitting 100 per cent FDI for insurance intermediaries apart from examining “suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders,” the minister had said.
“The insure-tech industry will benefit with 100 per cent FDI being permitted for insurance intermediaries in India as it will enable the insurance market to grow,” said Vishal Gondal, CEO and Founder GOQii.
This is also expected to “give rise to more players in the segment eventually bringing in competitive rates, which is healthy for the industry,” said Gotama Gowda, Co-Founder and CEO, Openapp adding that it will improve the investor focus in the sector and boost the wave of strategic foreign investors.
Importantly, India’s insurance gap worth $27 billion (in absolute terms) is the second largest in the world after China’s over $76 billion, PTI reported in October last year as a report by Lloyd’s of London even as global underinsurance gap stood at $162.5 billion in 2018 and it is hardly closing.
“India is an underinsured market, especially in rural areas. The proposed 100 per cent FDI in this segment will help the sector with the required capital infusion into the intermediaries segment that can expand their distribution networks in the rural areas as well. The capital infusion will also help with driving innovation and improving product offerings in the sector,” said Ankit Agrawal, CEO and CoFounder, Insurancedekho.
From $162.5 billion, the global underinsurance gap has gone down by only over than 3 per cent since $168 billion in 2012 as the global underinsurance report.
Nirmala Sitharaman had also proposed reducing the requirement of Net Owned Fund from Rs 5,000 crore to Rs 1,000 crore to enable on-shoring of international insurance transactions and to enable the opening of branches by foreign reinsurers in the International Financial Services Centre.