DFS firms up Insurance Act amendment proposals

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 IRDAI Act, a top Finance Ministry official indicated.

The proposed amendments to these two laws are part of the Centre 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.

“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.

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, sub classes and types of insurers; allowing services to insurers that are incidental or related to 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 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 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.