Insurance Bills referred to Parliament standing committee

Harjeet Ahluwalia

New Delhi, Aug 31: Much to the horror of the insurance industry, the two Bills pending for consideration in Parliament have been referred to the standing committee for finance. The bill to amend the Insurance Act, 1938 — to enable entry of cooperatives into insurance, allow more intermediaries into the sector and soften the norms for corporate agents — was introduced only two weeks back.

The legislation to amend the General Insurance Business (Nationalisation) Act, 1972, was tabled in the Budget session, and was aimed at delinking the four non-life subsidiaries of the public sector parent General Insurance Corporation to grant them more autonomy.

While government officials tended to down play the significance of the development, industry representatives reacted with regret. Officials said the move would help the government dilute any resistance the bills may later face in the Upper House, especially, since this House is dominated by the Opposition.

Once cleared by the standing committee, there would be an implied consensus that would facilitate their passage eventually.

However, industry sources pointed out that the government has not tried hard enough, taking cover behind the plea of opening up the sector to cooperatives and push through a slew of other measures pertaining to the industry. They observed that the delay in the bill leaves the issues of corporate agency and brokers open.

“Efforts of companies trying to go for more distribution channels will be put back”, a private insurer remarked. He said as it is the new companies are still casting around for the right Indian model for bancassurance. Lack of an enabling provision will only upset the process. With standing committees not known to attach urgency to vetting proposed legislations, it is a moot point whether the bills would get through even in the winter session, industry sources felt.