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FDI and Economic Development
FDI and Economic Development
FDI and Economic Development
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Public Sector
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6
1
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Life Insurance
General Insurance
Re Insurance
annual inflows to India. Basically, opening of the economy after 1991 does not live
much choice but to attract the foreign investment, as an engine of dynamic growth
especially in view of fast paced movement of the world forward Liberalization,
Privatization and Globalization.
FDI in Insurance Sector
Insurance is a capital-intensive industry. It is also a long-gestation business. In
countries like India, insurance industry is in great need of capital primarily
attributed to the following reasons1. Premiums rates remain under pressure due to intense competition on more
profitable lines. Falling premium income without a corresponding reduction in
claims is driving down profits.
2. Public and private sector insurers greater reliance on their investment
portfolios to generate sufficient income and gains for net profits subjects
them to the volatility of the financial markets.
3. Private insurers need to raise more capital otherwise growth could be
constrained since reliance on reinsurance for capital relief is not always
viable or available.