Indian insurance industry is expecting legislative measures allowing 100 % FDI and launching new systems like composite license’, differential capital’, reduction in solvency norms’, captive license, change in investment regulations, one-time registration for intermediaries and allowing insurers to distribute other financial products
New Delhi: Though high on agenda for the Modi government, Rs12 trillion Indian insurance industry, which has been keenly waiting for a new Bill, allowing a host of reforms including 100 per cent foreign direct investment(FDI) and composite licenses, to be introduced in Parliament for almost last 18 months, once again will miss them in the coming Winter Session of Parliament starting from Monday.
The winter session will begin on November 25 and conclude on December 20.
The government on Thursday has listed a total of 18 Bills, including 13 pending ones, in its tentative list of business to the Lok Sabha and Rajya Sabha Secretariats but there is no mention of any new Bill for amending existing Insurance Acts that would have ushered in a new era in the Indian insurance industry by allowing 100 per cent FDI and other extensive reforms measures like composite license, Captive Insurance, differential capital, reduction in solvency norms, captive license, change in investment regulations.
Industry sources point out that the government may now bring in a new Bill for amending existing Insurance Acts in the Budget session of Parliament that will begin in February 2025.
The new reforms are meant to achieve government’s broader goal of achieving “Insurance for All by 2047,” a vision Insurance Regulatory and Development Authority of India (Irdai) chairman Debasish Panda has been articulating for sometime.
Panda recently pitched for 100 per cent foreign direct investment in the insurance sector, saying a lot of capital is needed to achieve the goal of ‘insurance for all’ by 2027. He also wants more conglomerates to enter the insurance fray, pointing out that the Indian market offers handsome opportunities to grow.
One of the Indian conglomerates Reliance Industries has already announced its intention to float two insurance companies-one life and one non-life- through its financial subsidiary Jio Financial Services and possibly waiting for changes in existing insurance laws for facilitating composite licenses.
The current FDI ceiling for insurance companies is 74 per cent, with intermediaries already enjoying eased restrictions. The sector currently includes 24 life insurance providers, 26 general insurers, six standalone health insurers, and one state owned reinsurer—GIC Re and 12 foreign reinsurance branches(FRBs) set up by global reinsurance majors.
Earlier, Prime Minister Narendra Modi, seeking to come back to power for the third consecutive time, outlined his party’s- Bharatiya Janata Party (BJP)- commitment to make India a global hub for every emerging sectors including insurance.
Before that the the department of financial services(DFS) in November 2022 had sought public feedbacks about launching new systems like composite license, differential capital, reduction in solvency norms, captive license, change in investment regulations, one-time registration for intermediaries and allowing insurers to distribute other financial products.
Orginally, back on 29th Nov, 2022, with a much broader objectives of brining about much deeper and sharper reforms in the sector by enacting Insurance Laws(Amendment) Act, 2022, Department of Financial Services(DFS) had invited public comments on proposed amendments to the Insurance Act,1938′ and `Insurance Regulatory and Development Authority Act, 1999,’ which were subsequently put on back burner.
The host of new amendments would have be opened up registration to various classes, sub-classes and types of insurers with appropriate minimum capital requirements as specified by the IRDAI, allow services to insurers that are incidental or related to insurance business as well as distribution of other financial products as specified by IRDAI, enabling newer channels of distribution, providing for efficient use of capital and resources, etc.
Among some of the important Bills, the government has listed in the Winter Session of Parliament are -the Waqf Amendment Bill, the Coastal Shipping Bill, The Indian Ports Bill and the Merchant Shipping Bill.
The Coastal Shipping Bill seeks to promote coasting trade and encourage participation of Indian flag vessels owned and operated by Indian citizens for national security and commercial needs and Indian Posts Bill will allow measures to secure conservation of ports, security and pollution control at the ports in line with India’s international obligations and statutory compliance.
The objective Merchant Shipping Bill is ensure compliance with India’s obligation under maritime treaties, development of Indian shipping, and efficient maintenance of Indian mercantile marine.