Until recently, under its Foreign Direct Investment (FDI) policy, India permitted upto 74% foreign ownership in the Indian insurance companies. This limit was initially pegged at 26% when the insurance business opened up to the private sector in 2000. Later this limit was raised to 49% in 2015, and then again to 74% in 2021.
The 26/49/74% foreign investment meant that foreign insurers could only operate in a joint-venture model, partnering with an Indian business.
As part of the ongoing reforms, India has now permitted 100% foreign ownership in insurance companies. One can say the wheel has turned full circle – when the Indian insurance sector was nationalised (by the government taking over all the private insurance companies and aggregating into state-owned one life insurance company (in 1956), and four general insurers (in 1973)), to the latest reforms permitting full foreign ownership. This move also represents a decisive break from the joint-venture–led model that has historically characterised foreign participation in the sector.
The foreign investments can be made via the automatic route, subject to the insurance regulator’s licensing approval. Further, in sync with the new policy direction, several existing restrictions around local management and control have been eased. Now the only key requirement on that front is having a Chairperson, Managing Director, or the Chief Executive Officer who should be a resident Indian Citizen.
The reforms aim to attract long-term foreign capital, deepen insurance penetration, and encourage product innovation and market expansion.
Among other changes, certain limits for transfer of shares in insurance companies have also been relaxed.
What the 100% FDI mean for the Foreign Insurers
For foreign insurers, it creates a clear pathway for their participation in the growing insurance sector with full ownership, control, and long-term strategic investment. This may be particularly appealing for the insurers who were previously reluctant to enter India through joint ventures.
It may be noted that several major global insurers, including Sun Life, Prudential, AIA, AIG and Zurich Insurance Group, already have established presence in India (in joint venture with local partners), underscoring sustained international interest in the sector.
Introducing Managing General Agents as Insurance Intermediaries
The reforms have also introduced a new category of insurance intermediary – Managing General Agents (MGAs) – in the Indian market. This change opens the door for new business models that are widely prevalent in mature insurance markets. The detailed framework is awaited through supporting regulations.
While exact contours of the concept in the Indian context will be known once the regulations are out, MGAs generally can help in offering specialised or customised products and value addition services.
Regulatory Resources:
- Ministry of Finance Press Release – click here.
22 January 2026
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Notes:
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