Government proposed to increase the FDI limit in the insurance sector to 100%

Current Context: The Union Finance Ministry proposed to increase the Foreign Direct Investment (FDI) limit in the insurance sector from 74% to 100% on November 26, 2024.

• This proposal aims to ensure the accessibility and affordability of insurance for citizens, foster the expansion and development of the insurance industry, and streamline business processes.
• Key Points:
• The proposal includes enabling insurers to carry on one or more classes of insurance business and activities related to insurance.
• The requirement of Net Owned Funds for foreign reinsurers is proposed to be reduced from ₹5,000 crore to ₹1,000 crore.
• The Insurance Regulatory and Development Authority of India (IRDAI) is being empowered to specify lower entry capital (not less than ₹50 crore) for underserved or unserved segments on a special-case basis.
• The proposal is part of a comprehensive review of the legislative framework governing the sector, conducted in consultation with IRDAI and industry stakeholders.
• The government's goal is to achieve "Insurance for All by 2047" by doubling insurance penetration in the country.

Question:

1 What is the proposed new FDI limit in the insurance sector?

• A) 74%
• B) 80%
• C) 90%
• D) 100%

Answer: D) The proposal aims to increase the FDI limit from 74% to 100%.