Insurance
sector wants FDI cap up to 49%
Our Banking Bureau
15 October 2001
Mumbai: Most
private insurance players are of the opinion that the FDI cap on
private insurance companies should be increased to 49 per cent
from the current 29 per cent. This raise is particularly necessary
as new companies have
to bring in funds infusion of about Rs 400 to Rs 500 crore in the
initial years, and such large amounts can only be brought in with
foreign partners’ active funding.
The above findings came
up in a survey conducted by Ficci, which covered almost all the
private players in both life and non-life sectors.
Given the nature of the
business, new companies will be able to break even only after
seven to 10 years. Only multinational companies have the financial
ability and the technical skill to meet such contingencies.
In the survey, 90 per
cent of the players were of the opinion that bank assurance will
emerge as a vital component for distribution of insurance
products, but there was a majority opinion that banks in India are
not well equipped to distribute insurance products.
The
survey also showed that most companies felt rural insurance is a
viable business opportunity. However, the definition
of the rural sector by the regulator was not in consensus with the
census. Once this discrepancy is sorted out, rural insurance can
take off in a big way.
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