The Insurance Regulatory and Development Authority (IRDA) formed a new committee headed by Suresh Mathur to suggest ways to enhance Foreign Domestic Investment (FDI) in insurance intermediaries (other than insurance companies) and Third party administrators (TPA). The Committee would consist of ten members.
The Terms of Reference of the Committee are:
• To explore the options of further increasing FDI limit for insurance intermediaries.
• To analyse possible impact of such increase on the industry and other related sectors.
• To review the related international practices.
• To examine to what extent, if possible, the FDI limit can be increased in intermediaries and study the international practices in this regard.
Presently, a foreign company cannot hold more than 26% shares in an insurance company. But, in case of insurance intermediaries there is no such restriction.
There was also a consistent demand for increasing the foreign shareholding in insurance brokers from the existing limit of 26% to 100%. The aforesaid proposed change would not require any modification in the Insurance Act. But, In case of increasing foreign shareholding in an insurance intermediary or TPA, the insurance act would get modified.
There is a long pending Insurance bill in Rajya Sabha since 2008. This bill seeks to raise the FDI limit in insurance sector from existing 26% to the 49 %.
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