"The Authority, with a view to examining the issue of FDI in insurance intermediaries and TPAs (Third Party Administrator) and to recommend further course of action in this regard, constitutes the committee," IRDA said in an official release. (Agencies)
The terms of reference of the committee include whether there is a case for increasing FDI (Foreign Direct Investment) limit in case of insurance entities (other than insurance companies), the implication of modifying the limit on the industry and any other relevant issue.
The committee would also examine as to how much extent, if possible, the FDI limit can be increased in intermediaries and study the international practices in this regard.
The ten-member committee, to be headed by IRDA Senior Joint Director Suresh Mathur, will have officials from the regulator, insurance council, insurance companies as well as brokers.
As per the existing norms, the aggregate shareholding of a foreign company cannot exceed 26 percent in an insurance company. No such stipulation limits the foreign shareholding in cases of insurance intermediaries. However, the Insurance Regulatory and Development Authority (IRDA), keeping in mind that the insurance industry is in nascent stage, has limited the holdings of a foreign company to 26 percent in the case of insurance brokers and TPAs.
IRDA said that it was receiving references from various stakeholders requesting it to consider increasing the foreign shareholding in insurance brokers from the existing 26 percent to 100 percent as it would not require any change in the Insurance Act.
But in cases of increasing foreign shareholding in an insurance intermediary or TPA, the Authority would need to undergo amendments in the Insurance Act. Also, there is a long pending Insurance Bill which seeks to raise the FDI cap in the sector to 49 percent from existing 26 percent.
The Insurance Bill that seeks to raise FDI in insurance sector to 49 percent has been pending in Rajya Sabha since 2008.
"The Authority, with a view to examining the issue of FDI in insurance intermediaries and TPAs (Third Party Administrator) and to recommend further course of action in this regard, constitutes the committee," IRDA said in an official release.