The Insurance regulatory and Development Authority (IRDA), on Wednesday, batted for a hike in the foreign direct investment (FDI) limit to 49 per cent in the sector from the present 26 per cent.
“I am in favour of hike in the FDI limit for the insurance sector. Unless we go for 49 per cent, we will not have the kind of capital required to underpin the growth of the industry. This sector requires a lot of money,’’ IRDA Chairman J. Hari Narayan said on the sidelines of a summit here.
The Insurance Laws (Amendment) Bill has been pending before Parliament for about four years as there has been no consensus among political parties on the issue of raising the FDI limit to 49 per cent. Coming under pressure from its allies, the UPA II government, in May this year, had postponed a decision on raising the FDI limit in the sector to 49 per cent.
Earlier, Mr. Hari Narayan said the IRDA would develop ten standard products in consultation with industry bodies which could be launched by insurance companies without seeking the regulatory nod. “We will have to work closely with the Life Insurance Council and the General Insurance Council to see if we can develop such products,’’ he added.
The insurance regulator said the persistence level was very low in the industry and there was a need to bring in complete understanding of the market and insurance companies. The persistence level refers to client retention by insurance companies. He said `Use and File’ would not be in the general interest of the policy-holders since the persistence ratio was high.