India may ease norms for foreign-owned insurers: report

India may do away with the mandatory requirement of resident Indians to be either on the boards or in the top management of insurance entities that have majority foreign investment, as part of government efforts to further liberalize the insurance sector, Mint reported citing unidentified officials aware of the developments.

The finance ministry will soon initiate consultation on eliminating the mandatory requirement that at least one top executive be an Indian citizen, the report said, while pointing out that companies interested in investing in the Insurance sector may have found this provision restrictive.

In most private insurance companies in the country, the level of foreign direct investment (FDI) is still close to or lower than 49%.

Among life insurers, Aditya Birla Sun Life Insurance and Tata AIA Life Insurance have 49% foreign holdings, while the foreign entity owns a 26% stake in Bajaj Allianz Life Insurance.

In the case of general insurance firms, HDFC ERGO General Insurance has 49.9% foreign holdings, while IFFCO Tokio General Insurance Co. and Cholamandalam MS General Insurance Co. have 49% and 40% foreign investment, respectively.

The government had in 2021 allowed up to 74% FDI in the insurance sector. Currently, 100% FDI is permitted in insurance intermediaries such as brokers, reinsurance brokers, and consultants.

Multinational insurer Zurich Insurance Co. had last month acquired a 70% stake in Kotak Mahindra General Insurance Co. for ₹5,560 crore (about $670 million).

The transaction marks the largest foreign investment in India’s general insurance market and is the first by a foreign insurer since the FDI limit was raised from 49% to 74% in 2021.

The government, meanwhile, is also considering changes in the rules on dividend payouts and board composition that apply to insurance companies with FDI beyond 49%, the Mint report said.

The Indian insurance sector received over Rs54,000 crore worth of FDI in the past decade.