Insurance Current Affairs - 2019
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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.
The Cabinet has approved official Amendments to the Insurance Laws (Amendment) Bill, 2008 and its introduction in the Rajya Sabha. The decision was taken at a Cabinet meeting chaired by the Prime Minister Narendra Modi in New Delhi.
This amendment Bill aims at
- Removing archaic and redundant provisions in the relevant legislations.
- Enable the insurance sector to work for the betterment of the insured with greater efficacy.
Earlier, the Select Committee on the Insurance Laws (Amendment) Bill chaired by Rajya Sabha MP Dr Chandan Mitra had recommended a composite cap of 49 per cent on foreign investment in insurance. This will include all forms of FDI and foreign portfolio investments. At present the Foreign Direct Investment limit in the sector is 26 per cent.
In August 2014, Rajya Sabha had appointed a 15-member Select committee, to scrutinize the long pending Insurance Laws (Amendment) Bill, 2008. The Bill was held up for nearly six years on account of political differences. Thus after the cabinet approval, government is likely to bring the Bill for consideration of the Rajya Sabha.