Stocks of insurance companies continued to rise following the Ministry of Finance’s proposal to increase the foreign direct investment (FDI) limit in domestic insurers from 74% to 100%.
The Ministry has suggested amendments to several provisions of the Insurance Act of 1938, including the FDI increase, a reduction in paid-up capital requirements, and the introduction of a composite license. The Department of Financial Services (DFS) has invited public feedback on these proposals until December 10.
Insurance stocks have been active in response to the announcement. Companies such as New India Assurance, LIC, General Insurance Corporation of India, and others have seen gains of up to 15.5% over the past week. On the day of the announcement, all general insurance stocks were trading higher, with gains ranging from 0.5% to 2%.
However, life insurance stocks like HDFC Life, SBI Life, and Max Financial have not joined in the positive momentum, as ongoing regulatory concerns have dampened investor sentiment in this segment.
This marks the second public consultation by the DFS on proposed changes to the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999. Last year, in December 2022, the Ministry also invited comments on proposed revisions to these regulations.
The office memorandum, dated November 26, 2024, outlines the proposed amendments to the insurance laws aimed at improving accessibility and affordability for citizens, encouraging industry growth, and streamlining business processes. A thorough review of the legal framework governing the insurance sector was conducted in consultation with the Insurance Regulatory and Development Authority of India (IRDAI) and industry stakeholders.
Content retrieved from: https://www.news18.com/business/markets/finance-ministry-proposes-100-fdi-in-insurance-firms-insurance-stocks-gain-9139317.html.
