Indian insurance sector needs capital infusion of Rs 50,000 crore: IRDA

Hyderabad: The Insurance Regulatory Development Authority (Irda) on Friday said the Indian insurance sector needs capital infusion of Rs50,000 crore to expand reach, maintain a healthy capital base and improve solvency standards.

"Industry needs a huge amount of capital," said T.S. Vijayan, chairman of Irda, on the sidelines of an industry event in Hyderabad.

An increase in the 26% foreign direct investment (FDI) limit in insurance has been keenly awaited by overseas insurers looking to either enter the Indian market or seeking to increase their stakes in existing joint ventures.

The proposed higher limit-from 26% to 49%-will be a composite investment cap that will include both FDI and portfolio investors, but with a rider that the joint venture will have to be owned and controlled by the Indian partner.

Vijayan said Irda has made some suggestions to select committee, set up by Parliament to further scrutinise the Insurance Laws (Amendment) Bill 2008, before it is passed by Rajya Sabha, where the National Democratic Alliance (NDA) government doesn't have suffient numbers to push it through.

"The Bill was envisaged somewhere in 2006, and a lot of changes have happened in environment since then," Vijayan said.

Vijayan said, areas like health insurance, repositories and e-commerce that have evolved in recent times.

"Some of the suggestions are in relation to life, non-life and health, which were not there in the one proposed in 2006. Health companies have started working and now we have experience in the health sphere, e-commerce has come. Some of the things have to find place in the Bill itself," he said.

The total market size of the insurance sector in India was US$ 66.4 billion in the year ended March 2013. It is projected to touch US$350-400 billion by 2020.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.