FDI in standalone health insurers likely

Deepa Nair Mumbai | Updated on June 10, 2014 Published on June 10, 2014

Govt may also hike tax incentives for health insurance premiums

The government is considering a proposal to hike the foreign direct investment (FDI) limit in standalone health insurance companies to 49 per cent from 26 per cent, to give a fillip to the sector.

The government may want to test the FDI waters with the health insurance segment before opening up FDI in the capital-starved life insurance sector.

Bringing in FDI in a phased manner was one of the discussion points in the recent meeting of insurers with Financial Services Secretary, GS Sandhu, said the CEO of a private insurance company who attended the meeting.

Bill pending

The Insurance Laws (Amendment) Bill is pending in the Rajya Sabha, as the Bharatiya Janata Party had not allowed the previous United Progressive Alliance regime to increase the FDI cap despite several demands from private life insurers. V Jagannathan, Chairman and Managing Director of Star Health Insurance, said that increasing the FDI limit is a welcome move as it will help standalone health insurers maintain their solvency ratio at 1.5 times.

The health insurance portfolio is currently estimated at ₹16,000 crore with an annual growth rate of 16 per cent.

According to finance ministry sources, the government is also considering hiking tax incentives for health insurance premiums paid from ₹15,000 now.

At present, there are five standalone health insurers in the market.

Industry experts feel that if the FDI limit is raised in the sector, it may attract more foreign players into the country.

Focus on health insurance

The Narendra Modi-led Government is expected to focus on health insurance, as it is one of the priority areas identified by them.

In an earlier meeting with the financial services department, Finance Minister Arun Jaitley emphasised the need for a national policy on health as well as reforms in health insurance.

Published on June 10, 2014
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