Some major highlights of the Insurance Amendment Bill are as below:-
1. FDI has been hiked to 49% which will allow foreign companies to increase their stake in Indian joint venture. It will also help the Indian partner to raise money to beef up operations
2. The capital requirement for standalone health insurance companies has been lowered to Rs.50 crore so that more companies can be attracted into the sector.
3. Insurers to be liable for acts of agents to curb mis-selling.
4. The insurance regulator to check wasteful expenses by firms so that policyholders get better returns
5. Norms for the stopping rebating in insurance industry. Insurers to be held responsible for the conduct of their agents and Rs.10 lakh fine is proposed on agents trying to offer money to the clients.
6. A Separate law is being proposed to regulate motor insurance which shall address the concerns over third-party insurance
7. Lesser flexibility to insurance companies to cancel policies
8. Stopping illegal subletting of agencies and multilevel marketing set-ups which has continued despite a ban since long.
9. Safeguards to be introduced for frauds by way of assignment of policies. The bill shall recognise partial assignment of insurance policies. Further the bill also proposes to empower insurers to reject requests for assignment if it is against the interest of policyholders. This has been done to prevent trading in insurance policies
10. The public sector general insurance companies shall be able to raise money from the market with the overall cap of 51% government’s stake.
11. Foreign reinsurers to be permitted to open branches.
12. Lloyds of London allowed to set up operations in India.
13. Period for repudiating insurance policy capped at three years.
14. Insurance companies allowed to appoint insurance agents who passed IRDA exam
15. As per an estimate by IRDA the capital requirement of the insurance industry shall be Rs.61,200 crore over the next five years and the Indian investors have already pumped Rs.21,000 crore in this sector.
16. India which has an insurance penetration of 4.61% on life insurance business and .61% in general insurance business is likely to see an increase in the penetration level.
17. Liberalisation of restrictions on sanctions of loan and advances by insurers to vendors, employees and agents
18. These amendments are aimed at removing archaic and redundant provisions in the legislations and incorporating certain provisions to provide the Insurance Regulatory Development Authority (IRDA) with flexibility to discharge its functions effectively and efficiently.
19. To improve the functioning of surveyors and bring in greater transparency, certain modifications are made to provide for regulations on qualifications regarding appointment of surveyors and to strengthen the Institute of Indian Insurance Surveyors and Loss Assessors (IIISLA). The amendments proposed in the Bill seek to do away with the existing statutory prescriptions pertaining to licensing insurance surveyors and loss assessors etc. and leave these issues to be addressed by way of regulations.
20. The Insurance Laws (Amendment) Bill is likely to be taken up by Parliament when it meets for the Winter Session. A parliamentary committee headed by BJP leader Yashwant Sinha had studied the proposed changes and was not in favour of raising the cap on FDI to 49% partly because it could expose the economy to global downturns.