Foreign companies can now own more than 20% of a local insurer after legislation was passed relaxing restrictions.

Previously, foreign ownership of banks and insurers was capped at 15%.

Companies applying for a general insurance licence for fewer than five years must have assets below $50 million. Those seeking to become a life insurer or bank for fewer than five years must have assets below $200 million. Foreign owners must be considered “fit and proper”.

The Government is also making legislative changes to support the Australian Prudential Regulatory Authority’s dual licensing regime.

Assistant Treasurer Stuart Robert says the changes will reduce barriers to innovation in the financial system.