The Insurance Regulatory and Development Authority would favour raising the foreign equity cap in the Indian insurance sector from the existing 26 per cent if the Indian promoters fail to enhance the capital base required to sustain the high growth of the sector.

"We feel that as the business grows, the capital base has to be increased. If the Indian players don't bring additional funds, the government has to raise the foreign equity cap," IRDA chairman C S Rao told newspersons in Kolkata.

Maintaining that the Indian insurance industry already has the presence of all major foreign players, he said, "The IRDA will favour increasing the equity cap for foreign insurance companies to enhance the capital base."
 
The total foreign direct investment in the insurance sector currently stood at Rs 812.5 crore (Rs 8.12 billion) while the total paid up equity of the industry was Rs 3,916 crore (Rs 39.16 billion).

The industry had registered a combined growth rate (for life and non-life segments) of 25 per cent over the last two years.

The total premium income of the industry stood at Rs 71,376.11 crore (Rs 713.76 billion) for the year ending March 31, 2003 with the share of life and non-life segments being 78 and 22 per cent, respectively.