ICRA budget reaction comments on Insurance Sector

India Infoline News Service | Mumbai |

The hike in FDI will help the players to raise capital

Karthik Srinivasan, Sr. VP, Co-head, Financial sector ratings, ICRA Ltd, said, “On expected lines, the composite cap on FDI in insurance has been increased from 26% to 49% through the FIPB route. The hike in FDI will help the players to raise capital as well as attract more foreign players to enter the Indian insurance market which remains an underpenetrated market.”
The penetration reduced to 3.2% in 2012 for Life segment from 4.6% in 2009 and remains even lower at 0.8% for non-life segments in 2012. The Insurance Bill, which has been pending from 2008, if passed during the current year could bring in more reforms and aid in increasing the performance and penetration levels. While the General Insurance sector would require capital of Rs 75-175 billion over the next five year with higher requirement from the private sector, the Life Insurance companies are well capitalised as on date on the back of improved profitability and moderation in growth and accordingly would require capital only as the growth picks up.


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