The much anticipated fresh round of insurance reforms may be round the corner with the Department of Financial Services (DFS) in the Finance Ministry now having firmed up the amendment proposals to the Insurance Act and Insurance Regulatory & Development Authority Act, a top Finance Ministry official indicated on Monday.
The proposed amendments to these two laws are part of the Center and IRDAI’s overall efforts to enhance insurance penetration, encourage product innovation and diversification so as to achieve the goal of ‘insurance for all’ by 2047.
With all industry and stakeholder feedback now received by the department, the DFS is understood to have forwarded the proposals to the Law Ministry for further action before sending the draft Bill to the Cabinet for approval.
Indications are that the Government may introduce the amendment Bill in the second leg of Budget session beginning March 13.
“Entire exercise has been completed from DFS end. It is now for the process to move forward. No timeline can be given as the processes now are outside the control of the DFS”, sources said.
Slew of reforms
On the anvil are a slew of big reforms including introduction of concept of “composite insurance license”; captive insurers; differential minimum capital requirements after opening up registration to various classes, subclasses and types of insurers; allowing services to insurers that are incidental or related to the insurance business; and allowing insurers to distribute other financial products as specified by IRDAI.
The latest proposals — which had been exposed by the Department of Financial Services in the Finance Ministry for comments by December 15 — are intended to, among other things, facilitate entry of more players in the insurance market, leading to economic growth and employment generation, and enabling ease of doing. business.
Asked about the status of the Insurance Amendment Bill, Debasish Panda, Chairman, Insurance Regulatory & Development Authority of India (IRDAI), said on Monday that the date (December 15 last year) by which public comments were sought by government have now closed. “It (Bill) should be in the offing, but I cannot give a timeline as to when it will be introduced in the House or approved by Parliament”, Panda said.
Tapan Singhel, Chairman of General Insurance Council (GIC), said that he was hopeful that the proposed Insurance Amendment Bill would come through (in the budget session) as it has been done with a lot of collaborative effort. Singhel asserted that GIC is not divided or opposed to any of the proposed reforms and was all for introducing measures like composite licensing and allowing captives in the country.
He expressed confidence that the proposed reforms initiated by the government and IRDA would lead to more players entering the insurance market in the coming days. “The direction is encouraging,” he added.