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LATEST NEWS UPDATES | Bill to reform insurance sector may come in monsoon session - Subhash Narayan

Bill to reform insurance sector may come in monsoon session - Subhash Narayan

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published Published on Feb 10, 2023   modified Modified on Feb 10, 2023

The draft bill allows insurance companies the freedom to sell different financial products

Mint

The government is likely to introduce the Insurance Laws (Amendment) Bill 2022 in the monsoon session of Parliament to bring deep reforms in the insurance sector, including a provision for composite insurance licence and flexibility in entry barriers, two people aware of the development said. According to them, stakeholder consultation on the draft bill is expected to be completed by the end of March before the final version is presented for cabinet approval, followed by its introduction and passage in Parliament.

“The Bill is almost ready but the industry wants certain clarifications and changes in some of the provisions. We were expecting it to get Parliamentary approval in the Budget session itself but a need is felt to discuss the provisions of the Bill threadbare considering inputs from stakeholders so that a progressive and growth-oriented legislation is drafted," said one of the people quoted above. Queries to the finance ministry remained unanswered till press time.

However, an official said anonymously that insurance sector reforms were top of the government agenda and that a progressive, forward-looking legislation is on its way. The government is not looking at intruding into the independence of general and life insurance councils and the insurance law is thus unlikely to change the composition of councils by including a government representative. The person said the industry wanted wider representation in the councils and if the changes impact autonomy, it should be avoided.

Among other things, the draft bill also allows insurance companies the freedom to sell different financial products, just like banks. These could include products such as mutual funds, but clarity on this would emerge once rules governing the amended legislation are drafted.

The bill has divided the industry, with certain sections favouring the move as progressive, while others, including state-run general insurance companies, opposing such licences for insurers, which they feel can further fragment the market and allow entry of various “non-serious" and financially weaker players into the vast Indian insurance market.

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Subhash Narayan, Livemint, 10 February, 2023, https://www.livemint.com/news/india/bill-to-reform-insurance-sector-may-come-in-monsoon-session-11675962819752.html


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