Insurance Amendment Bill Proposing 100% FDI Set for Cabinet Nod
Finance ministry eyes Parliament monsoon session to push major insurance sector reforms, including full foreign ownership and eased regulations.
The Insurance Amendment Bill is ready and will be placed before Cabinet for its approval soon. After Cabinet nod the department of financial services under the finance ministry would begin the process for introduction of the Bill in the Parliament, an official source said on Sunday.
The Insurance Amendment Bill proposes 100 per cent foreign direct investment (FDI) in the insurance sector. The finance ministry is also hopeful that the bill will be tabled in Parliament during the upcoming monsoon session. Monsoon session of Parliament usually commences in July.
Union finance minister Nirmala Sitharaman in this year’s Budget speech proposed to raise the foreign investment limit to 100 per cent from existing 74 per cent in the insurance sector as part of new-generation financial sector reforms. “This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified,” she had said.
The finance ministry has proposed to amend various provisions of the Insurance Act, 1938, including raising FDI limit in the insurance sector to 100 per cent, reduction in paid-up capital, and provision for composite licence. The bill also proposes agents to be allowed to sell products from multiple insurers breaking away from the existing exclusivity model.
As part of comprehensive legislative exercise, the Life Insurance Corporation Act 1956, and the Insurance Regulatory and Development Authority Act, 1999 will be amended alongside the Insurance Act, 1938. The amendments to LIC Act propose to empower its board to take operational decisions like branch expansion and recruitment.
The proposed amendment primarily focuses on promoting policyholders’ interests, enhancing their financial security, and facilitating the entry of more players into the insurance market leading to economic growth and employment generation. Such changes will help enhance efficiencies of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve the goal of insurance for all by 2047.
