Unified License Explained Currently, there is a lot of complexity in the rules of the insurance sector. Especially regarding the license. For example, life insurance companies cannot sell health cover. But general insurance companies are allowed to sell health and marine insurance products. The government wants to remove this policy complexity with the unified license. This will benefit both the insurance company and the customer.
The government is preparing for major changes in insurance laws. The most important among these is to bring a unified license for insurance companies. Also, the government wants to increase the current limit of foreign direct investment (FDI) in the insurance sector from 74 percent to 100 percent. The purpose of these changes is to bring more and more citizens in the country under the ambit of insurance. Currently, less than four percent of the citizens in the country have insurance.
What is a unified license?
Right now the rules for life, general and health insurance products in India are quite complex. For example, a life insurance company cannot sell health cover. But, general insurance companies are allowed to sell health to marine insurance products. The government wants to remove this policy complexity with a unified license. This will allow a single insurance company to offer life, general and health insurance products.
What are the benefits of a unified license?
- Life insurance companies will be able to sell products like health cover. General insurance companies will also be able to sell life insurance.
- This will reduce the complexity of rules, which will encourage domestic and foreign insurance companies to increase investment.
- This will also be convenient for customers. They will not have to go to different companies for different insurances.
- The unified license will increase competition among insurance companies, which will provide better products and services to customers.
- This will improve the regulatory framework, which will allow better monitoring of the activities of insurance companies.
What will be the benefit of 100% FDI?
- The insurance industry requires huge capital. This need will be fulfilled by 100% FDI.
- At present, the insurance sector is dominated by domestic companies, increasing the FDI limit will increase competition for them.
- The arrival of foreign companies will diversify insurance products, giving customers more options.
- Job opportunities in the insurance sector will increase, giving more employment opportunities to the youth.
- 100% FDI in the insurance sector will contribute to economic development, which will strengthen the economy.
100% FDI in the insurance sector can also be a big opportunity for foreign companies like Allianz. German company Allianz can enter the Indian market independently, which is seriously considering separating from its Indian partner Bajaj.
