India gears up for ‘Insurance for all by 2047’ – major push underway
New Delhi (The Uttam Hindu): India is set to become the sixth largest insurance market in the world in the next seven years, by 2032. According to the Insurance Regulatory and Development Authority of India (IRDAI), India ranks tenth globally in life insurance and 15th in non-life insurance. Furthermore, in 2019, India's share of the global life insurance market was recorded at 2.73 percent and 0.79 percent in the global non-life insurance market.
This year's GST rate reduction of 18 percent on health and life insurance premiums is rapidly expanding financial security. According to PM Modi, "Next Gen GST reforms make life and health insurance more affordable. This is another important milestone in our journey towards achieving the goal of 'Insurance for All by 2047.'"
IRDAI regulates the Indian insurance industry to protect the interests of policyholders in the country and works for the orderly growth of the industry.
Regarding the history of the country's insurance sector and the establishment of IRDAI, the Government of India initiated economic reforms and financial sector reforms in 1991. The Committee on Insurance Sector Reforms, chaired by R.N. Malhotra, was formed in 1993 to recommend reforms in the insurance sector. The Malhotra Committee recommended several reforms in 1994. A significant recommendation included private sector participation in the development of insurance companies. Other recommendations included allowing foreign promoters and delegating the government's regulatory powers to an independent regulatory body accountable to Parliament. Subsequently, IRDAI was established as an autonomous body under the Insurance Regulatory and Development Authority Act, 1999. IRDAI opened the market in August 2000 by inviting applications for registration. Foreign companies were then permitted to hold up to 26 percent ownership.
On February 1 of this year, Finance Minister Nirmala Sitharaman announced an increase in the foreign direct investment limit for the insurance sector from 74 percent to 100 percent. However, this increased limit will apply to companies that invest their entire premiums in India.
A bill amending insurance laws will be among the nine economic bills the government will introduce in Parliament's winter session on Monday. The government plans to introduce the Insurance Laws (Amendment) Bill, 2025, to boost investment in the insurance sector. The insurance sector has attracted ₹82,000 crore in foreign direct investment (FDI) to date.