Kathmandu. An Indian parliamentary committee on Wednesday urged the government to increase the foreign direct investment limit in the insurance sector to 100 percent and put in place safeguards to address concerns such as profit repatriation.
The Standing Committee on Finance in its report said that the downsides of foreign direct investment in India’s insurance sector should be adequately and carefully addressed. The committee stressed the need to adopt some safeguards to address concerns such as profit repatriation. These include foreign investors repatriating earnings to their home countries instead of reinvesting in India, reduction in decision-making power of domestic firms, job security concerns arising from possible automation and cost-cutting measures, focus on high-margin policies, neglect of rural and economically weaker sections, etc.
In terms of the integration of insurtech (insurance technology) in the sector, the report mentioned the potential to enhance efficiency, customer experience and risk assessment through digital innovation. Because advanced digital technologies like artificial intelligence (AI), big data analytics and blockchain can streamline underwriting, claims processing and risk assessment, making insurance more accessible and efficient.
Wide adoption of digital platforms will enable insurers to reach unserved rural and semi-urban markets. Thus, inclusive growth needs to be driven and India’s insurance ecosystem strengthened, the panel said in its report.
In the Budget, Finance Minister Nirmala Sitharaman announced an increase in the foreign direct investment (FDI) limit from 74% to 100%.
