Insurance sector seeing strong interest from foreign investors since 100% FDI: IRDAI chief

The insurance sector is seeing renewed interest from foreign investors since the foreign direct investment (FDI) limit was increased to 100% in 2024, Insurance Regulatory and Development Authority of India (IRDAI) chairperson Ajay Seth said on Tuesday. The insurance regulator has already approved a proposal by a foreign investor looking to increase their stake in their Indian insurance venture and is reviewing another, he added.

“There are also a lot of interest coming in from some of the foreign promoters seeking to get into a 100% ownership position. There are two conversations happening,” Seth said. While faster growth in non-life insurance has made it the preferred target for equity hikes, interest in life insurance is catching up as fresh regulatory reforms begin to reshape the sector, he added.

“In the past 10 years, the life insurance sector grew exactly as per the economy, around 2.5 times, whereas general insurance grew 3.5 times. But I do see that life insurance also has the potential to grow at the same pace,” Seth said at a conference by the Life Insurance Council to unveil a consumer awareness comic book series aimed at promoting insurance literacy.

IRDAI has already cleared one proposal where a foreign investor is raising its stake to 100%, and is reviewing a second application where the foreign shareholding will increase substantially, with the ultimate goal of full ownership, Seth said. He added that the regulator also recently received a similar majority-ownership proposal within the life insurance sector.

“That was a very welcome development, because a large foreign insurer is coming and taking a big position. That is something to show. We feel this sector has got the potential, and even other foreign investors and promoters feel the same.”

Since the FDI limit was increased from 74% to 100%, Allianz SE exited its 26% stake in the insurance and general insurance joint ventures (JVs) with the Bajaj Group in March 2025, before returning to the market through a 50:50 JV with Jio Financial Services.

Prudential Plc has announced plans to acquire a 75% stake in Bharti AXA Life Insurance, marking a strategic departure from its existing 21% position in ICICI Prudential Life Insurance – which in turn will need to be brought down to 10%.

Last month Liberty Mutual Insurance announced an increase in its stake from 55% to 74% in Liberty General Insurance, its general insurance JV in India. Manulife Financial entered into a life insurance JV with the Mahindra Group in November 2025, extending its asset management partnership with the group.

One-stop platform behind schedule

Admitting that the rollout of the Bima Sugam platform is running behind schedule, the IRDAI chief said the platform is expected to launch by the end of September 2026. Bima Sugam is the proposed one-stop digital insurance platform that is expected to allow users to buy, manage and claim their policies in one place.

“It depends upon not just Bima Sugam being ready, it is also the insurers doing their technology work so as to be able to connect,” Seth said, adding that life insurers are largely ready to connect, which means that term insurance should be available “straight away”. On the non-life side, the roll out will begin with select products including motor and health, following which other product lines will be introduced, he said.

“The idea there is, it is a market infrastructure institution. All insurers are putting money, there is no leader there. So, [it will offer] good quality products at a much lower cost because the platform doesn’t have to survive on a high commission, though it may require some fees,” he said, hinting that distribution via the platform may not be free.

Mis-selling in focus

As such, the regulator is actively working on distribution reform to curb mis-selling by ensuring product suitability. By the end of July 2026, IRDAI aims to release a consultation paper covering distribution frameworks and linked commissions. Seth said the paper will define product suitability using practical illustrations based on a customer’s income and risk profile.

The Reserve Bank of India’s recent guidelines on the sale of third-party products, including insurance policies, by banks, is a step in this direction and will go a long way in “building trust”, Seth said.

“They have done their piece. Now, all those banks are also licensees of the insurance sector. They are factory agents. Now it is our turn to bring in suitable guidelines for them both in terms of mis-selling illustrations as well as on the bundling of products,” he said.

“Appropriate products at affordable prices, accessible to all people in all parts of the country from trusted insurers. That is how we should approach the goal of insurance for all rather than chasing a number. That would be the right way to move forward,” Seth said. He admitted, however, that there is a “lot of work to be done” to achieve the government’s goal of Insurance for all.