Topic 7: INSURANCE: INOCULATED

In February 2025, the Indian insurance sector experienced notable developments, largely driven by key announcements in the Union Budget 2025-26. One of the most significant reforms was the increase in the Foreign Direct Investment (FDI) limit from 74% to 100% in the insurance sector, contingent on premiums being invested in India. This change is expected to attract considerable international capital and expertise, thereby boosting the sector's growth potential. The Budget also highlighted the enhancement of digital infrastructure, including the Central KYC registry and Bharat Trade Net, to improve customer onboarding and streamline international operations. In terms of growth, the non-life insurance sector saw a significant rise in premium income, particularly in health, motor, and crop insurance, supported by government initiatives such as the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Additionally, increased participation from private players, coupled with technological advancements and product innovation, contributed to the sector's rapid expansion. However, insurance penetration in India remains relatively low at 3.7%, compared to the global average of 7%, with factors like limited awareness and economic constraints continuing to pose challenges. Looking ahead, the sector is poised for substantial growth, driven by regulatory reforms, digital transformation, and expanded coverage for emerging segments like gig workers. Despite this, insurers will need to navigate increased competition and evolving customer needs. Overall, February 2025 was a transformative month for the Indian insurance sector, with the Budget's reforms laying the groundwork for heightened foreign investment and technological progress.



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