The increase in FDI limit in the insurance sector is expected to provide employment opportunities to additional six lakh individuals in next few years.
The increase in FDI limit in the insurance sector is expected to provide employment opportunities to additional six lakh individuals in next few years. While life insurance firms currently provides direct employment to close to 2.5 lakh individuals, the general insurance firms employs around 1.10 lakh individuals. Besides this, industry experts added that the domestic insurance sector provides indirect employment to close to 20 lakh individuals.
The industry is expecting about $8 - $10 billion investments from foreign insurance giants during the next five years. Last week the government passed the insurance amendment bill in Rajya Sabha, which increased the FDI cap in the insurance sector from 26 per cent to 49 per cent.
“If the economy grows at 6-7 per cent per annum, the insurance industry is likely to see foreign inflow of around $8 bn -$10 bn in next five years. This will provide huge employment opportunities in the Indian market. The direct employment in health insurance, micro insurance and pension and retirement segments are expected to see a sharp growth in the coming years. Overall, we can expect a 25 per cent increase in both direct and indirect employment as insurance firms expands their business operations,” said P. Nandagopal, promoter OpenWorld Money Financial Services Marketplace and former managing director and CEO of IndiaFirst Life Insurance .
According to Mr Nandagopal, it would be the mid sized firms and newer entrants that will be a major beneficiary of this hike in the FDI cap. “It’s a capital intensive industry and firms require additional capital to set up distribution centres and underwriting new business. Additionally, firms need to set aside 1 per cent of the total sum at risk as solvency capital. So as and when the business volume grows, they have to bring in additional capital,” added Mr Nandagopal.
“FDI not only brings in capital and foreign exchange immediately into the economy but also enables companies to invest further in managerial ability, technical knowledge, administrative organisation, and innovations in products and production techniques,” said Tarun Chugh, MD and CEO, PNB MetLife.
“Health, pension and educational products are under-penetrated in India. But the awareness is increasing and there is an increase in demand for these products in India. The employment opportunities would also be huge in this segment,” said G. V. Nageswara Rao of NSDL and former MD & CEO of IDBI Federal Life Insurance.
