The hike in foreign direct investment (FDI) limit from 49 per cent to 74 per cent in the insurance sector is set to shorten the break-even period for the industry in India from current eight years to five, finds a working paper by the Indian Institute of Management (IIM) Indore.
The study says the move will provide the Indian insurance sector much needed impetus to develop physical & digital infrastructure, recruit and train skilled manpower, design innovative products, add new channels and develop new business models to reach the low-income segment of the population.
Titled ‘FDI in Insurance: Meaning and Impact’, the paper has been authored by IIM Indore faculty Prashant Salwan and studies the impact of the amended insurance bill passed in Lok Sabha recently.
“Indian insurance firms need to develop physical & digital infrastructure, recruiting and training of skilled manpower, design innovative products, add new channels and develop new business models to reach the low-income people in India. These all strategies require huge investments. Moreover, it takes around eight years for an insurance firm to make profits in Indian insurance market which would come down by three years to just five years post FDI,” Salwan tells Business Standard.
Source: Business Standard
