Lok Sabha passes Insurance Laws (Amendment) Bill, 2015
Lok Sabha on 4 March 2015 passed the Insurance Laws (Amendment) Bill, 2015. It was passed by voice vote and replaces ordinance promulgated in this regard.
The proposed amendments in the bill aim to bring improvements and revisions in the existing laws relating to insurance business in India.
In this regard it seeks to remove archaic provisions and incorporate modern day practices emerging in a changing dynamic environment, which includes private participation.
Some key provisions of bill
- Hikes Foreign Direct Investment (FDI) cap in the insurance sector to 49 percent from present 26 percent.
- Establishment of Life Insurance Council and the General Insurance Council. They will act as self-regulating bodies for the insurance sector.
- Allows PSU general insurers to raise funds from the capital market. It also provides for increased penalty to deter multilevel marketing of insurance products.
- Imprisonment of up to 10 years for selling policies without registration with the insurance regulator.
- Prohibits an insurer from challenging the life insurance policy on any ground after a period of three years of selling it.
It should be noted that the hike in FDI of insurance sector has potential to attract up to 7-8 billion US dollars from overseas foreign investors.