Insurance sector poised for distribution cost reset after 100% FDI approval

India's insurance sector is set for a structural shift in how distribution costs are measured and capped, following the government's approval of 100% foreign direct investment in the industry.

General insurers will transition from using gross written premium as the benchmark to domestic GDPI (Gross Domestic Product Index). The distribution cost ceiling is expected to trend towards 20% within five years, down from the current 32.1%.

This recalibration aims to align the sector with international standards and create a more competitive marketplace as foreign insurers gain greater access to India's growing insurance market.