India’s insurance regulator, the IRDAI, is making bold moves to fuel long-term growth. In a fresh proposal, it plans to double the investment limit for insurers in REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). It also wants to allow insurers to put money into gold ETFs through ULIPs (Unit-Linked Insurance Plans).
Why does this matter? Because it opens new doors for big capital to flow into real estate, infrastructure, and gold—three solid long-term bets.
Right now, insurers can only invest up to 3% of their funds in REITs and InvITs. IRDAI wants to increase this to 6%. That’s double the support for property and infrastructure. More funding here means more homes, more roads, and stronger economic growth.
But that’s not all. Gold ETFs are now in the spotlight too. For the first time, insurers could be allowed to invest up to 5% of ULIP fund assets into gold ETFs. This would still fall within the current 15% limit for mutual fund exposure, so it’s well balanced.
Why gold? Because it’s winning big. Over the last year, gold gave 30% returns. In comparison, equity, FDs, and liquid funds gave around 5–8%. Over five years, gold jumped 90% in dollar terms. It’s clear why insurers want a piece of it.
As of March 31, 2024, life insurers were managing a massive Rs 61.57 lakh crore. Most of it was in traditional policies. But a rising chunk, Rs 7.61 lakh crore, was in ULIPs. The new rules would make sure this money is working harder and smarter.
IRDAI also wants to lower the public float requirement in REITs and InvITs from 30% to 25%. This will align insurance investment norms with the broader capital market standards.
According to Crisil, REIT and InvIT asset sizes could grow by 15–20%, reaching Rs 7.5–8 lakh crore by FY25. That’s huge. IRDAI’s new proposal would only help speed that up.
This shift didn’t come out of nowhere. Two of India’s biggest insurers asked for gold ETF exposure. IRDAI listened. Now it’s making way for smarter, safer, and more diversified insurance investments.
Bottom line? IRDAI is thinking ahead. These changes will not just benefit insurance companies. They’ll boost India’s real estate, strengthen infrastructure, and give investors better long-term returns.
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