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  Editorial for the January - 2015
Editor's Name :
Lalit P Mehta
Lalit P Mehta
 
Description :
 
By promulgating the Insurance Laws Amendment Ordinance (Ordinance) on Dec 26, the Indian government showed its seriousness   The amendments through the Ordinance to the insurance laws aimed at ushering in the much needed second generation reforms in the Insurance sector. 
The changes in the existing laws through the ordinance reflect the changing times and will impact the entire insurance economy, especially through inflow of large capital, robust regulatory regime- Irda has been equipped with much higher power for ensuring the orderly functioning of the sector-, new technology, global standards and practices, improved distribution channels and affordable insurance products. 
The next step- Insurance Act which had faced many hurdles in the past in getting passed in the Parliament should follow soon as the emphatic statements of Arun Jaitley, union finance minister indicates that the government is committed to complete the legislative process and will go that extra miles in accomplishing that.  
He has also assured that any decisions on the basis of the Insurance Ordinance will have full backing of the law. 
Now without waiting for the Insurance Act, both the Indian government and the insurance regulator IRDA are expected to bring out the corresponding regulations to reflect the changes in the insurance laws in the next few months. 
In tandem, the existing insurance companies and the prospective players have started working on their new agenda and business model though it looks like they all will be announced and implemented after the Insurance Act is in place.  
Insurance companies and intermediaries would benefit from the additional capital support (foreign investment and new instruments) to help increase its penetration across India, financial inclusion and help develop the sector into a mature and well-rounded one. 
Of India's 46 private insurers, 31 currently have foreign ownership at the 26% threshold or close to it, placing them in the group that will immediately benefit from the lifting of the FDI cap, says international rating agency Moody's Investors Service,
Though the last liberalisation way back in 2000 when the private sector players with their foreign partners were allowed helped the insurance sector in India grow by leaps and bounds, the potential of the insurance segment in a large country like India remain untapped and unrealised. 
According to the Swiss Re, India's total insurance penetration -- premiums as a percentage of GDP -- fell to 3.9% in 2013 from 5.2% in 2009, versus a total penetration of 5.5% in Thailand and 4.8% in Malaysia during 2013.
As the Indian insurance industry is gearing up to chart out the new agenda that will bring about the transformation in the sector, our next few issues will analyse a few issues that will play an important role in the emerging scenario.
 
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