Insurance News Updates for India
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- Almost two years after the UPA government referred the Insurance Amendment Bill aimed at raising the foreign direct investment cap in the sector from 26% to 49%to a Group of Ministers (GoM), the panel finally paved the way for the Bill to be introduced in Parliament.
Besides increasing the foreign investment cap, other proposed amendments would allow Indian promoters to continue to hold a majority stake in insurance companies. They would also allow public sector non-life insurers to sell a minority stake to raise capital. The proposed revisions would enable foreign reinsurance companies to enter the Indian market as well.
The reforms will require amendments to the Insurance Act, 1938; LIC Act, 1956; IRDA Act, 1999; and General Insurance Business (Nationalisation) Act, 1972.
- Insurance companies invested Rs35,880 crore (US$8.1 billion) in government securities in the last fiscal year ended 31 March, 173% higher than the amount invested in 2006/07, according to data from the Reserve Bank of India (RBI).
The share of insurance companies in overall investment in the government securities market rose to 23% during 2007/08, more than double the 9% share during the previous financial year.
The decline in the stock market since late 2007 has prodded insurance companies into shifting their investment portfolio towards fixed income securities.
- About Rs10,000 crore (US$2.26 billion) is expected to be invested by insurers in venture capital (VC) funds in the next six to eight months, in a bid to earn higher returns, reports the Economic Times.
IRDA recently allowed insurance firms to invest 3% of their total investible funds or 10% of the fund’s size, whichever is lower, into VC funds.
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