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Budget 2021: Big Boost for Insurance Sector; FDI Hiked to 74%

Updated on: 14 Dec 2021 // 1 min read // #mmm news
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COVID19 reiterated need for adequate insurance in a stern manner. Taking stalk of the situation, the Finance Minister has hiked Foreign Direct Investment (FDI) to the sector from 49% to 74%.

Previously in 2015, the government had hiked FDI for insurance sector from 26% to 49%.

Finance Minister Nirmala Sitharaman in Union Budget 2021-2022 Speech on Monday said:

“I propose to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% in insurance companies and allow foreign ownership and control with safeguards.”

The government had already allowed 100% FDI in insurance intermediaries i.e. entities such as insurance brokers, reinsurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors.

Ours is largely an underinsured nation. The stats are dismaying. Despite COVID 19 health emergency, life insurance penetration in India is 3.6% of the GDP which is much lower than the global average of 7.13%. Thus, focus on insurance as a sector in Budget 2021 is a welcome step. It will augment foreign inflows and help insurance companies to foster customer friendly products and services according to growing business needs.

The step can indeed be a game changer and would definitely strengthen the sector by improving penetration of insurance in the country.

Also Read: 6 Pillars of Union Budget 2021 and Their Inclusions