Finance Minister Nirmala Sitharaman’s Budget proposal to raise the limit of foreign direct investment (FDI) from 49 per cent to 100 per cent in the insurance broking industry that accounts for a pie of Rs 4,500-5,000 crore has come under flak from domestic brokers.
Domestic insurance brokers, numbering over 400 consisting of direct brokers, reinsurance brokers and composite brokers, have opposed the 100 per cent FDI in the insurance broking industry as the segment doesn’t need much capital and the proposal wouldn’t ensure large inflows of overseas investment into the country. The segments in the insurance industry that will benefit from the new move are: insurance surveyors and loss assessors, third party administrators (TPA), web aggregators and corporate agents.
Currently, the insurance broking industry deals with over Rs 30,000 crore of premium primarily from the non-life industry which generated over Rs 170,000 crore of premiums in 2018-19. As insurance brokers receive between 15-20 per cent of commission in placing different categories of general insurance business, they account for around Rs 4,500-5,000 crore of business.
Source : https://indianexpress.com/article/business/economy/union-budget-raising-of-fdi-in-insurance-broking-to-100-upsets-domestic-brokers-5819956/