The Budget 2019 proposal, to raise the limit of foreign direct investment (FDI) from 49 percent to 100 percent in the insurance broking industry, has come under flak from domestic brokers.


  • The insurance industry of India consists of 63 insurance companies of which 24 are in the life insurance business and 39 are non-life insurers.
  • The broking industry is a decade old industry. Starting in 2003, the number of insurance brokers in India has increased significantly and is poised to grow further.
  • Insurance intermediaries are the backbone of the industry that accounts for a pie of Rs 4,500-5,000 crore.
  • They help in the distribution of insurance policies and also help customers get attractive rates for the products.
  • 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.
  • In India, the Insurance Regulatory and Development Authority (IRDA) regulates, promotes and ensures orderly growth of the insurance industry, protection of the policyholders and settlement of insurance claims under the provisions of the Insurance Regulatory and Development Authority of India Act, 1999 (IRDA Act 1999).
  • In order to form a consolidated framework to regulate the affairs pertaining to the insurance business in India, the Government enforced the Insurance Laws (Amendment) Act, 2015 (Insurance Act).


  • Foreign Direct Investment serves as a source to the resource requirements of the host country playing a significant role in enhancing its production level.
  • It offers multiple benefits such as access to capital, internationally available technologies, management know-how, marketing skills, and others.
  • In 2015, the Insurance Act (Amendment) Act 2015 increased the FDI cap in the insurance sector to 49 percent from 26 percent. After the change in the Insurance Act in 2015, a provision called ‘Indian management control’ was announced. This meant that the control of the company was to be in the hands of the Indian shareholder at all times. This led to discontent among foreign shareholders since they were of the view that they were unable to take a lead in key decisions in the companies.
  • In the Union Budget 2019, the government has announced 100 percent of Foreign Direct Investment (FDI) for insurance intermediaries.


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. The move to allow 100 percent FDI for insurance intermediaries is a positive step and it will help in the long-term and holistic development of the industry

  • Adoption of Latest Technologies: In the current scenario, there is a huge gap between the technology used by the insurers and the surveyors. The entry of foreign players will also bring in the latest technology and advanced digital platform used by surveyors worldwide.
  • Expertise in the Field: The decision can be a game-changer as high-quality global capital and expertise will flow into the Indian insurance industry.
  • Job Creation: The change in FDI will attract significant investment in the sector and enable the adoption of global best practices and lead to significant job creation both directly and indirectly.
  • Overall Growth of Industry: An increase in FDI would help bring more investment, enabling companies to expand operations thus helping in the development of the economy.


  • Doubtful Investment Flow:Insurance is a capital-intensive sector. When the insurance FDI was hiked in 2015, there was an expectation that almost Rs 60,000 crore would flow into the sector. However, the actual flows were less than half of the number.
  • Greater Influence of Foreign Players: The decision could pique the interest of those waiting on the hinges. There is some opposition from existing brokers, as they do not want to be overtaken by their foreign partners.
  • Discrimination: Permitting 100 percent FDI in broking when it is 49 percent in insurance companies would be direct discrimination against local insurance brokers. Further, this would decimate most of the Indian brokers engaged in direct insurance and reinsurance broking and who do not have a joint venture with an overseas broker.


In 2003, IRDA opened the Indian market to Insurance brokers and slowly Insurance brokers in India are taking a baby step towards becoming at par with global insurance brokers. In the said domain, the present move will liberalize the investments by making available more choices for the consumers in terms of advisors, quality of services and competitive costs. The decision will lead to further change in the way the industry conducts its business and engages with its customers. Though there are some issues from various sections of the brokers which are needed to be addressed by the government for better implementation.
With several positive changes in the regulatory framework, the future looks promising for the insurance industry. Now, it is hoped that the step would lead to enhancement of service standards in alignment with global trends which would benefit the ultimate policyholders’ interest.

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