The government is planning significant changes to insurance laws. The most notable is the introduction of a unified license for insurance companies. Additionally, the government aims to increase the current Foreign Direct Investment (FDI) limit in the insurance sector from 74 per cent to 100 per cent. These changes are intended to expand insurance coverage across the country, as currently, less than four per cent of citizens have insurance.
What is a Unified License?
Currently, the rules for life, general, and health insurance products in India are quite complex. For instance, a life insurance company cannot sell health insurance, while general insurance companies are allowed to sell both health and marine insurance products. The government aims to simplify this policy with a unified license, which will enable a single insurance company to offer life, general, and health insurance products under one license.
What are the benefits of a unified license?
Life insurance companies will be able to sell products like health cover. General insurance companies will also be able to sell life insurance.
This will reduce the complexity of rules, which will encourage domestic and foreign insurance companies to increase investment.
This will also be convenient for customers. They will not have to go to different companies for different insurance.
The unified license will increase competition among insurance companies, which will provide better products and services to customers.
This will improve the regulatory framework, which will allow better monitoring of the activities of insurance companies.
What Will Be the Benefit of 100% FDI?
1. Fulfilment of Capital Needs
The insurance industry requires significant capital, which can be fulfilled through 100% FDI.
2. Increased Competition
Currently, the insurance sector is dominated by domestic companies. Raising the FDI limit will create more competition for them.
3. Diverse Insurance Products
The entry of foreign companies will diversify insurance products, providing customers with more options to choose from.
4. Boost in Job Opportunities
With 100% FDI, the insurance sector will see growth, leading to increased job opportunities for the youth.
5. Contribution to Economic Development
Higher FDI in the insurance sector will contribute to the country’s economic growth, thereby strengthening the economy.
6. Opportunity for Foreign Companies
100% FDI will open doors for global companies like Allianz to operate independently in India. The German company Allianz, currently partnered with Bajaj, is seriously considering entering the Indian market on its own.
How to Apply for a Unified License
- Check Eligibility: Ensure your company meets IRDAI’s criteria for financial stability and compliance.
- Prepare Documents: Gather required documents like incorporation proof, current licenses, financial statements, and business plans.
- Submit Application: Fill out the form on IRDAI’s portal and submit it along with the required documents.
- Pay Fees: Complete the payment for application processing.
- Verification: IRDAI will review and inspect your company’s details.
- Get Approval: Upon approval, your company will be issued a Unified License.