The reform blueprint for amending the country’s insurance law, which includes enabling provisions to offer a composite licence for industry players, is almost ready, but the government is yet to firm up its mind on timing the introduction of these changes in Parliament.
According to a senior finance ministry official, the department of financial services has finalised the provisions of the Insurance Laws (Amendment) Bill. “The work by the DFS has been completed but when it would be tabled in Parliament is difficult to indicate. It is up to the government if they wish to introduce it in the upcoming second half of the Budget session,” he said.
Also read: Higher than SCSS! Senior Citizens get a new Fixed Deposit offer with 8.85% interest rate
Post drafting of the Bill by the nodal ministry or department, it is sent to the law ministry for legal vetting and then has to be cleared by the Union Cabinet before it can be tabled in Parliament. Both Houses are scheduled to reconvene on March 13 following the recess and is expected to conclude on April 6. Given the wide-ranging reforms proposed, it has been expected that the Bill would be taken up in the Budget session of Parliament so that it can be approved in the current calendar year before the general elections in 2024.
The finance ministry had in November 2022 invited comments on proposed amendments to the Insurance Act, 1938, and Insurance Regulatory and Development Authority Act, 1999. The last date for submitting comments was December 15, 2022. The draft Bill seeks to amend both these Acts. Some of its key provisions include a composite insurance registration with which would enable insurers to undertake multiple types of insurance (barring reinsurance) through a single entity. It also seeks to remove the minimum capitalisation requirement of Rs 100 crore and would instead be specified by the Irdai based on the size and scale of operations, class or sub-class of insurance business and category of the insurer.
Earlier this month, insurance regulator Irdai had also called a meeting of the chiefs of insurance companies to discuss the various provisions of the Bill, among other issues.
Also read: How millennials and Gen Z are changing the face of short term rental asset investment market
No decision on Budget tax proposal on insurers:
The official also said the finance ministry has not taken any decision to review the proposal in the Union Budget 2023-24 to tax income from aggregate premium above Rs 5 lakh in a year. “Insurers have met the finance minister and the revenue secretary but a decision has not been taken,” he said. The life insurance industry has requested that the government should consider hiking the threshold to at least Rs 7.5 lakh, if not Rs 10 lakh for aggregate premium.