Govt To Potentially Introduce Amendments In Insurance Act In Upcoming Budget Session: Report

The sources said the draft bill has been prepared and will be shared with the Cabinet for the approval. The Finance Ministry remains hopeful that it will be introduced in the upcoming Budget session

The Indian government is reportedly planning to initiate a bill seeking revisions to the Insurance Act, 1938, in the upcoming Budget session to help achieve the goal of ‘Insurance for All by 2047’, media reports said. 

According to a report by PTI, the proposed changes in the bill could include a reduction in solvency norms, composite license, differential capital, revision in investment norms, and one-time registration for intermediaries, among others. 

The report cited sources and said that the decision would help encourage differentiated insurance firms to enter the banking sector. Currently, the banking industry has categories like universal bank, small finance bank, and payments bank.

The sources noted the draft bill has been prepared and will be shared with the Cabinet for the approval. The Finance Ministry remains hopeful that the bill will be introduced in the upcoming Budget session.

The report stated that the proposed changes aim to enhance the interests of the policyholders and give a boost to the returns for the customers. Further, the bill aims to facilitate more players in entering the industry, in turn promoting economic growth and generate employment. The sources added that the changes should help increase the efficiency of the insurance industry on an operational and financial level, and aid in stimulating the ease of doing business.

Notably, the Finance Ministry sought comments on the proposed revisions to the Insurance Act, 1938 and the Insurance Regulatory Development Act, 1999, earlier in December 2022.

The Insurance Act, 1938, helps provide the legislative framework for the insurance industry in India. It also helps regulate the relationship between insurers, policyholders, shareholders, and IRDA, the regulatory body.

Currently, 25 life insurance firms and 32 general insurance firms function in the country and these include companies such as ECGC Limited and the Agriculture Insurance Company of India Ltd.