100% FDI In Insurance: Mayuresh Joshi Highlights Stocks To Track

The Finance Ministry’s proposed amendments to the Insurance Act, 1938, including raising FDI to 100%, reducing paid-up capital requirements, and introducing composite licenses, could significantly reshape the insurance sector. Mayuresh Joshi, Head of Equity Research at William O'Neil India, highlights key implications for insurance stocks. Joshi notes that life insurance players heavily depend on their parent or banking channels for distribution. Changes in regulations may require insurers to diversify distribution channels, potentially increasing costs related to commissions, expenses, and upfront investments. This shift could pressure margins, including Value of New Business (VNB) margins and embedded value. While the sector remains underpenetrated, with strong growth prospects, recent product rationalization and regulatory tweaks may impact profitability. Investors are advised to monitor developments as the sector adapts to these proposed changes.