GFIA supports India’s Insurance Act reform to remove foreign equity cap and boost investment

The Global Federation of Insurance Associations (GFIA), a collective of insurance organisations from across the globe, has expressed strong support for India’s recent proposal to amend its Insurance Act.

In a letter to India’s Finance Minister, GFIA applauded the government’s decision to make significant changes to the Insurance Act, particularly the removal of the foreign equity cap—a long-awaited reform that aligns with India’s broader efforts to liberalise its economy.

Foreign insurers have been an integral part of India’s insurance market since the sector’s liberalisation in 1999, with more than two-thirds of the country’s life and non-life insurance companies having foreign partners.

However, despite this involvement, some foreign insurers have scaled back their investments or exited the market altogether. This trend signals the need for further regulatory adjustments to unlock the full potential of the insurance sector.

GFIA also welcomed the Indian government’s willingness to review regulatory safeguards introduced in past reforms. The organisation emphasised the importance of ensuring that previous regulations do not inadvertently stifle the growth and development of the sector.

According to GFIA, India’s insurance market is one of the most promising in the world, but competing nations have already implemented more investor-friendly policies, making it crucial for India to update its regulatory framework.

The GFIA has called on the Indian government to seize this opportunity to reassess and adjust rules that place additional restrictions on insurers with foreign partners.

By doing so, India could create a more favourable environment for foreign investment, attracting new players to the market, generating employment opportunities, and expanding the range of insurance products available to its citizens.

As we reported earlier, The Insurance Regulatory and Development Authority of India (IRDAI) has approved the R2 license for Valueattics Reinsurance, marking it as the first private sector reinsurance company in the country.

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