The bill provides that the IRDAI may in the interest of the policyholders, specify by the regulations, the limits of any commission, remuneration or reward in any form payable to an insurance agent or an insurance intermediary, the manner of such payment, the manner of disclosures required and such other matters related to insurance agents or insurance intermediaries
New Delhi/Hyderabad:The Insurance Amendment Bill 2025, likely to be tabled in the Lok Sabha by finance minister Nirmala Sithraman on Tuesday, has further empowered the insurance regulator IRDAI to collect information relation to policies and claims from insurers and other regulated entities for efficient discharge of its functions, and to regulate and develop the insurance business.
The bill provides that the IRDAI may in the interest of the policyholders, specify by the regulations, the limits of any commission, remuneration or reward in any form payable to an insurance agent or an insurance intermediary, the manner of such payment, the manner of disclosures required and such other matters related to insurance agents or insurance intermediaries.
Currently, any commission to intermediaries is covered under expense of management(EoM) of insurers which is capped by the IRDAI.
According to the bill, insurance intermediary” includes––insurance brokers, re-insurance brokers,insurance consultants, corporate agents, third party administrator, surveyors and loss assessors, managing general agents,insurance repositories; and such other entities, as may be notified by the IRDAI from time to time.
Amending section 23 of the IRDAI Act will enable the IRDAI to delegate functions to the chairperson or any other member or officer of the regulator other than the powers to frame regulations and grant of registration to insurer.
New Investment norms
in case of an insurer carrying on life insurance business––(i) twenty-five per cent. of the said assets in Government securities;(ii) a further sum equal to not less than twenty-five per cent of the said sum in Government securities or other approved securities; and the balance, in any of such approved investments, with such limitations, conditions and restrictions as may be specified by the regulations;
In the case of a General Insurer-
(i) twenty per cent of the said assets in Government securities;(ii) a further sum equal to not less than ten per cent of the said sum in Government securities or other approved securities; and (iii) the balance, in any of such approved investments, with such limitations, conditions and restrictions as may be specified by the regulations: Provided that an insurer may, subject to such conditions as may be specified by the regulations, invest or keep invested any part of its controlled funds or assets otherwise than in approved investments, if such investments do not exceed fifteen per cent.
The bill seeks to amend section 49 of the principal Act to extend restrictions on declaration of the dividends out of surplus to all insurers.
Where the registration of an insurance company is cancelled, the IRDA may, after the expiry of six months from the date on which the cancellation took effect, apply to the Court for an order to wind up the insurance company
Also, If any person who acts as an insurance intermediary without being registered under section 42D to act as such, he will be liable to a penalty which will not be less than one lakh rupees, but may extend to ten lakh rupees and any person who appoints as an insurance intermediary or any person not registered to act as such or transacts any insurance business in India through any such person, will be liable to a penalty which will not be less than ten lakh rupees, but may extend to one crore rupees.
In case, the person contravening the provisions is a company or firm, it can be penalised not be less than one lakh rupees, but may extend to ten lakh rupees.
LIC
The bill seeks to empower Life Insurance Corporation(LIC) to establish zonal offices on its own, without prior approval of the Central Government. It also provides the overseas branches of the corporation to maintain the funds of the branch or office in accordance with the laws of that country.
Moreover, it specifies the overseas branches of the corporation to utilise the surplus in such branch or office in accordance with the laws of that country.
The Corporation shall constitute in the prescribed manner for each zonaloffice an Employees and Agents Relations Committee consisting of such number of persons as it thinks fit and every such Committee shall consist of representatives of the Corporation and of its employees and agents, so however, that the number of representatives of the employees and agents on the Committee shall not be less than the number of representatives of the Corporation and it shall be duty of the Committee to advise the Zonal Manager on matters which relate to the welfare of the employees and agents of the Corporation or which are likely to promote and secure amity and good relations between them and the Corporation
The bill will also amend section 61A of the principal Act to put an obligation on Appellate authority( Securities Appellate Tribunal)to record reasons, if appeal is not disposed of within the time specified in the Act.
The bill will amend Section 64F of the principal Act to broad base membership of the Life Insurance Council and General Insurance Council and to provide for membership of two persons to be nominated by the Central Government in both Councils.