Categories: National

Cabinet Approves Amendments in Insurance Act 1938

The Union Cabinet has given its nod for amendments in the Insurance Act, paving way for 74 per cent foreign direct investment in the sector. Currently, the permissible FDI limit in life and general insurance stands at 49 per cent with ownership and management control with Indian. According to sources, the Cabinet in its meeting has approval for amendments in the Insurance Act, 1938. It was in 2015 when the government hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent. 

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Under the new structure:

  • The majority of directors on the board and key management persons would be resident Indians, with at least 50 per cent of directors being independent directors, and a specified percentage of profits being retained as a general reserve.
  • An increase in FDI will help improve life insurance penetration in the country. Life insurance premium as a percentage of GDP is 3.6 per cent in the country, way below the global average of 7.13 per cent, and in the case of general insurance, it is even worse at 0.94 per cent of GDP, as against the world average of 2.88 per cent.
  • The government has earlier allowed 100 per cent foreign direct investment in insurance intermediaries.

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Sumit Arora

As a team lead and current affairs writer at Adda247, my role involves researching and creating informative and engaging content aimed at helping candidates prepare for national and state-level competitive government exams. I specialize in delivering insightful articles that keep aspirants updated on the latest current affairs trends and developments. My primary focus is on educational excellence, ensuring that our readers are well-prepared and informed to face their exams with confidence. Through meticulously crafted content, I aim to guide and support candidates in their journey toward success.

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