Foreign investment in India's life insurance

A new bill, expected to pave the way for more foreign insurance companies to exploit the Indian market, has been approved by the Lok Sabha. The bill, titled 'Sabka Bima, Sabki Raksha', is part of the central policy of insurance for all. As per the provisions of the bill, the foreign investment limit in the insurance sector will be increased from 74 per cent to 100 per cent. When the bill becomes law, large foreign insurance companies will enter the Indian market. Whether it will pose a threat to the existing public sector insurance institutions is a matter that needs to be assessed in the future.

The target of rapid economic growth can be achieved only when foreign investment spikes. Currently, only 30 per cent of the country's population of about 1.4 billion people has life insurance. Less than 50 per cent of the population has health insurance. Although insurance is mandatory for vehicles, the number of Indians yet to renew their insurance is very high. There is no doubt that the motley many foreign insurance companies can tap into this sector and win business. This policy change is likely to be beneficial for economic growth in general.

Foreign monopoly companies generally follow an approach of staying away from investments that deprive them of authority. They are kept away by the fear that the money they invest may get entangled in local laws, interventions and regulations. This crisis will be avoided with the arrival of the new bill. The central government has already set a goal of ensuring insurance coverage for all citizens by 2047. The existing number is insufficient to implement this. The centre estimates that with the arrival of foreign insurance companies, competition between companies will increase and coverage will be available to more people at affordable premium rates. However, the opposition fears that the new bill will pose a serious threat to the survival of public sector insurance institutions like LIC.

Moreover, there are positive results that contradict the predictions of economic experts. In this era of globalisation, people care less whether it is a foreign company or a domestic one. People are just bothered about the premium rates. Along with this, they should get the insurance amount without any delay or hassle. The people in the country are not insistent on using only products made in India.