100% FDI in insurance likely to reduce premiums, attract global players: DFS Secy Nagaraju

The government’s decision to allow 100% foreign direct investment (FDI) in the insurance sector is expected to draw significant global capital and help lower insurance premiums, Department of Financial Services (DFS) Secretary M Nagaraju told CNBC-TV18.Nagaraju said India is increasingly seen as a key investment destination by global insurers, with several international players expressing interest in raising their stake and expanding operations. The government aims to encourage leading global insurers, particularly from Europe and the US, to set up subsidiaries in India.He described the proposed Insurance Amendment Bill as the biggest reform in the sector, designed to improve capital availability, strengthen competition, and enhance consumer outcomes. “With higher capital infusion, insurance premiums should not increase. Over time, we expect them to come down,” Nagaraju said.Regulatory oversight and agent commissionsThe government is keen to empower the Insurance Regulatory and Development Authority of India (IRDAI), particularly in overseeing distribution costs and agent commissions. High commissions, he noted, often push up premiums or strain insurers’ capital ratios, ultimately affecting consumers.“There have been complaints that some agent commissions are excessively high. This either leads to higher premiums or puts pressure on capital adequacy. In both cases, consumers suffer,” he said, adding that IRDAI is expected to issue draft regulations on agent commissions.Composite licensing, open architecture, and governance reformsThe government has received multiple suggestions on insurance law reforms but believes more deliberation is needed before approving composite insurance licences or open architecture for individual agents. “We felt it was not the appropriate time to approve these measures,” Nagaraju said.He noted that the age limit for IRDAI members has been raised from 62 to 65 years to align with other financial regulators. On leadership norms, either the chairman, MD, or CEO of an insurance company must be a resident Indian, but only one of the three positions needs to be held by an Indian citizen.Certain restrictive conditions for insurance company boards have also been eased to improve governance.All public sector insurance companies are performing well, and there are no current plans to consolidate them, Nagaraju said. He also highlighted that credit-deposit (CD) ratios are healthy in most public sector banks, and the government has no concerns regarding the deposit front.Sector outlookInsurance density and penetration in India have been rising steadily, but global participation remains limited. The reforms, Nagaraju said, are expected to deepen foreign investment, strengthen regulation, and improve consumer outcomes while maintaining sector stability.Also Read: RBI: Banking sector resilient in FY25; gross NPA ratio hits multi-decade low(Edited by : Shoma Bhattacharjee)First Published: Dec 29, 2025 7:36 PM IST

Source link