Centre signals higher FDI in insurance

While ruling out any disinvestment plans for state-owned insurance companies, the Centre is actively considering a proposal to hike the limi...

While ruling out any disinvestment plans for state-owned insurance companies, the Centre is actively considering a proposal to hike the limit on foreign investment in insurance sector to 49 per cent from 26 per cent, said Union Minister of State for Finance Anandrao Adsul.

“We are working on a proposal to raise the existing ceiling of 26 per cent, as growth in the insurance sector will increase employment opportunities”, said Adsul, adding that no time limit has been set for taking a decision on it, “as we want to consult the industry and stakeholders.”

Adsul was in the city to address an insurance seminar organised by Prabodhan Prakashan, a pro-Shiv Sena outfit. “We are happy that we have opened up the sector for private sector entry and it is not necessary to effect disinvestment in our companies,” he added.

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Adsul who came down heavily on private insurers for refusing to underwrite loss-making motor insurance said that the Centre is also considering prescribing a quota, which can be as much as 25 per cent for private general insurance players to provide risk cover for motor vehicles. On motor insurance coverage, Adsul said that non-life insurance companies were suffering heavy losses due to bogus claims as a consequence of which insurance players were not favourably inclined to go into the motor insurance business. Hence there was a need for participation, especially of private players.

A decision would be taken on mandatory quota for private players, he added. “There is resistance to raise the premium for motor insurance and we are ready to have a meeting with transporters on this issue.”