Assocham has projected that foreign direct investment (FDI) would increase by $460 million to touch $960 million in the insurance sector in the next two years.
According to the chamber, the insurance sector could only attract FDI of $217.97 million in the first five months of the current year. The country?s total insurance market is pegged at about $30 billion, of which FDI accounts for 1.6%. Assocham president Sajjan Jindal said that if the insurance sector is opened up to allow 49% FDI by 2010, its contribution to insurance would touch nearly $2 billion. Currently, only 26% FDI is permitted in the insurance sector.
The chamber has also projected that the insurance sector would touch $60 billion by 2012. India?s insurance market lags behind other economies in the baseline measure of insurance penetration, which stands at 3.1% for India as compared to UK (12.5%), Japan (10.5%), Korea (10.3%) and US (9.2%). Currently, FDI represents only Rs 827 core of the Rs 3179 crore capitalisations of private life insurance companies, the chamber added.
