The proposed Insurance Bill 2025 will empower Insurance Regulatory and Development Authority to cap agent commissions through regulations and also tightening oversight on payouts and disclosures, NDTV Profit learnt through sources.
In addition, people in the know told NDTV Profit that IRDAI will decide commission limits through regulations. It will also prescribe limits on any commission, remuneration or reward payable to agents or intermediaries.
Commenting on this Nilesh Sathe, Former IRDAI told NDTV Profit that the commission and remuneration always had a limit and regulations on commissions were already present,
He further added that these regulations must be placed within six months of passing of the Act.
The Union Cabinet had earlier this month approved the Insurance Amendment Bill, increasing the cap of foreign direct investment into the sector to 100%, sources told NDTV Profit.
With this reform, foreign investors will be allowed to hold up to 100% stake in insurance companies based in India, as compared to the existing rules that cap their ownership at 74%.
The proposal was first floated by Finance Minister Nirmala Sitharaman in February, while presenting the Union Budget for financial year 2025-26.
The enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified, she had said.
The government also expects removing the FDI cap will attract stable and sustained foreign investment, increase competition, facilitate technology transfer, and improve insurance penetration in the country.
As of 2024-end, foreign investors held 47.82% stake in life insurance companies, 40.8% in private sector general insurance firms and 29.46% in private sector standalone health insurers, according to government data.
Despite having 57 insurance companies (24 life insurers and 34 non-life insurers), penetration in India remains low. In FY24, insurance premium penetration was 3.7% of GDP, with life insurance at 2.8% and non-life at 0.9%, as per government data.
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