FDI in Indian Non-Life Insurance Sector: Boost Market Potential

Abstract

FDI brings up the capital inflows from abroad which is invested in the production capacity of the economy and are preferred as external finance because they are non-debt creating, non-volatile and their returns depend on the performance of projects financed by investors. It expedites international trade and transfer of information and technology. Thus, ‘FDI acts as a catalyst for the growth nation’. The Indian insurance market is expected to grow up to 125 percent in the next decade which would indirectly be a boost for the Indian Economy. Increased FDI limit up to 100 percent will allow more new players to enter and strengthen the existing companies. This will promote higher competition, innovative products, digital distribution channels and cheaper policy premium for their customers. Therefore, this paper primarily focuses on the FDI in the Insurance sector in India and its significance. In the Budget 2015-16 the government announced, three ambitious Social Security Schemes about Insurance and Pension Sector (a) PradhanMantri Suraksha Bima Yojana (b) PradhanMantri JeevanJyoti Yojana and (c) Atal Pension Yojana. These schemes help to create universal social security system for all Indians, especially the poor and underprivileged. The health insurance scheme Ayushman Bharat will provide good quality health care up to Rs.5 lakh per family per year at government and private hospitals all over India. This scheme will be available for 50 crore Indians and covers 10.74 beneficiaries. In this backdrop, this article aims to analyze the performance of Non-life Insurance sector in India after the increase of FDI from 26 percent to 49 percent (which has come into force from 16 March 2016).