India releases final rules on higher FDI for insurers

At least 50% of annual net profit must be maintained as general reserve.

India’s finance ministry has released the final rules for the higher foreign investment ceiling in the insurance industry, according to media reports.

Effective 19 May, the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021 require that an Indian insurer have an additional insolvency margin for higher foreign investment.

At least 50% of an insurer’s annual net profit must be retained as general reserve if the solvency margin is 1.2 times lower than the control level of solvency.

In addition, those that have foreign investors must have the majority of its directors and key management persons as resident Indians.

Insurers have one year to comply with the new rules and will apply to 23 life insurers, 21 non-life insurers and seven health insurers.

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