Big insurance overhaul: Draft ready, new India cover story awaits green light
New Delhi, Nov 27, 2024
Synopsis
The bill proposes 100% foreign investment in the insurance sector. It also reduces capital requirements for insurance companies. A composite license will allow companies to offer various insurance products. The bill aims to increase insurance coverage in India. The government seeks final approvals before presenting the bill to Parliament.
The Insurance Amendment Bill, which proposes 100% foreign direct investment in the sector among other liberalisation measures, will be introduced after a nod from the highest level, people aware of the development told ET.
The government may want to push the Banking Laws Amendment Bill through before taking up the insurance amendment bill, they said.
“The draft bill is ready, and once the final approvals are received, it will be presented to the cabinet and then accordingly listed in Parliament,” a government official told ET.
The bill proposes to raise the FDI limit to 100% from 74%, lower capital requirements besides introducing a composite licence for companies to offer life, non-life, and health products.
Earlier this month, Insurance Regulatory and Development Authority of India (IRDAI) chairman Debasish Panda had made a case for 100% FDI in the sector, arguing that much capital is needed to achieve the goal of “insurance for all” by 2047.
“If the cabinet does not suggest any changes, we expect it to be introduced in this session itself,” said another official, adding that the government is keen to see the passage of the Banking Amendment Bill as it is focussed on changes aimed at the ease of life of the public at large.
In 2022, the government had invited comments on amendments proposed to the Insurance Act, 1938, and the Insurance Regulatory and Development Authority Act, 1999.
The bill proposes to remove the `100 crore minimum paid-up equity capital requirement for carrying out life, general and health insurance business as part of a significant revamp. The ministry, while inviting comments, had noted that the aim is to enhance efficiencies in the insurance industry—operational as well as financial—and enable ease of doing business.
“The proposal includes various measures such as opening up registration to various classes, sub-classes, and types of insurers with appropriate minimum capital requirements as specified by (sector regulator) IRDAI,” the ministry had said, adding that this is being done in view of the changing needs of the insurance sector.
The proposed amendments also focus on enhancing the financial security of policyholders, promoting their interests, improving returns to them, and facilitating the entry of more players in the insurance market, bolstering economic growth and employment generation.
[The Economic Times]
