JOIN USInsurance sector regulator Irda has constituted a committee to look into a possibility of increasing FDI in insurance intermediaries and TPAs.
“The Authority, with a view to examining the issue of FDI in insurance intermediaries and TPAs (Third Party Administrators) and to recommend further course of action in this regard, constitutes the committee,” Insurance Regulatory and Development Authority (Irda) said in a statement.
The terms of reference of the committee include whether there is a case for increasing foreign direct investment (FDI) limit in case of insurance entities (other than insurance companies), the implication of modifying the limit on the insurance industry and other relevant issues.
The committee would examine as to how much extent, if possible, the FDI limit can be increased in intermediaries and study international practices in this regard to take an appropriate decision.
The ten-member committee, to be headed by Irda Senior Joint Director Suresh Mathur, will have officials from the regulator, insurance council, insurance companies as well as brokers, the statement added.
As per existing norms, aggregate shareholding of a foreign company cannot exceed 26 per cent in an insurance company.
No such stipulation limits the foreign shareholding in cases of insurance intermediaries.However, Irda, keeping in mind that the insurance industry is in a nascent stage, has limited the holdings of a foreign company to 26 per cent in the case of insurance brokers and TPAs.
But in case of increasing foreign shareholding in an insurance intermediary or TPA, the Authority would need to undergo amendments in the Insurance Act.
The Insurance Bill, which seeks to raise FDI ceiling in the capital-intensive sector to 49 per cent from existing 26 per cent, is pending in the Rajya Sabha since 2008.