The insurance industry needs big investments for growth in the coming years and will welcome hike in FDI cap, sectoral regulator Irda said on Monday.
The industry needs a lot investment for future growth, Insurance Regulatory Development Authority (Irda) Chairman J Hari Narayan said to a query on the sidelines of an Assocham summit.
"So, we will welcome the steps to increase the FDI in insurance sector," he added.
Foreign Direct Investment in the insurance sector is capped 26 per cent. With the government taking policy reform initiatives last week, especially allowing FDI in multi-brand retail and aviation sectors , there is expectation that the limit in the insurance industry may be raised.
Hari Narayan also said Irda is mulling to follow the lead insurance model based on geography, which is followed by the banking industry known as 'lead banking model', for growth in the sector.
In the banking sector, the model is followed in specific areas to give emphasis on availability of various services in one particular zone, which the regulator is considering to replicate.
"Irda has proposed the lead insurance model on the basis of geography, just like the banking industry," Hari Narayan said, adding that the regulator is waiting for feedback from the life insurance and non-life insurance council.
Talking about approval of pension products, Hari Narayan said those filed by companies are not pension products.
"They may call it pension product. Its much like a mutual fund products. That is you make a periodic investment and you can pull back at any point of time. So, these products will not be approved.
"What we have said is that a pension product should have an annuity. So product without any element of pension will not be approved," he explained.
Hari Narayan further said Finance Minister P Chidambaram had met with select insurers earlier in September, where insurers had suggested some measures for the growth of life insurance industry.