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New Delhi, Jan 29: The finance ministry will, in all likelihood, act on the recommendations given by Insurance Regulatory Development Authority (Irda) and reduce the minimum required capital base for stand-alone health insurance companies from Rs 100 crore to Rs 50 crore. Official sources claimed that an announcement to the effect would be made in the forthcoming Budget.
The sources said that the government was keen to go ahead with the holistic amendment of the Insurance Act in the Budget session. “Key policy decisions, including those on capital base and foreign direct investment (FDI) are still pending. However, these may be taken up in the next Parliament session,” sources added.
There is pressure on the finance ministry to push for insurance reforms. “Until these reforms are carried forward, the growth in the sector would stagnate,” industry sources said.
It may be noted here that the KP Narsimhan committee submitted its report to the Irda a few months ago. The ministry is under pressure to develop the health insurance, especially because a large number of foreign companies are already waiting in the wings to enter the Indian market.
Irda officials also said that FDI limit for health insurance sector should be pegged at 51%. At present, health insurance policies are primarily sold in the urban and semi-urban markets. They said that efforts should be made to make it popular among the lower income group.
The government is also under pressure from various stakeholders to increase tax concessions on investments in health insurance products. It may also look at announcing separate capital base norms for separate insurance segments such as health and agriculture.
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