The much-anticipated Insurance Law (Amendment) Bill 2023 will not be presented in the ongoing monsoon session of Parliament. The Bill is expected to introduce pathbreaking reforms, including a provision allowing insurance companies to operate in both life and non-life sectors under a single licence, while also addressing crucial aspects such as differential capital and solvency norms.
Despite the Union Cabinet’s approval for its presentation, the Insurance Law (Amendment) Bill 2023 is absent from the list of 31 bills expected to be presented in this session. The Department of Financial Services had devoted extensive efforts to prepare the Bill, making it even more eagerly awaited.
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The proposed amendments to the Insurance Act 1938 and Insurance Regulatory and Development Authority Act 1999 are hailed as game-changers for the sector. The transition from the current Insurance Act 1938 to the Insurance Act 2023 is envisioned to be smooth, devoid of complex changes.
Insurance Law (Amendment) Bill 2023
Earlier, the government sought public comments on various issues, ranging from issuing captive licences and changing investment regulations to enabling insurers to distribute other financial products. Moreover, provisions for different minimum paid-up capital, tailored to the size, scale, and type of insurer, promise to open doors for new players and foster innovation in the industry.
The Bill’s introduction of captive insurers empowers industrial houses to establish their insurance companies, tailored to their specific business needs. This move empowers enterprises to wield greater control over their insurance coverage, customizing policies to align with their requirements.
An exciting proposal under the Bill allows applicants to apply for a composite license, enabling them to undertake any type of insurance business, be it life or non-life, under a single entity. This shift will promote convenience and efficiency in the industry. To replace the outdated Insurance Act 1938, the government prioritizes the adoption of contemporary laws to address present-day challenges effectively. This legislative pursuit resonates with the ongoing efforts to modernize India’s legal framework.
In line with this vision, the Insurance Regulatory and Development Authority of India (IRDAI) is actively pushing for the implementation of two high-tech projects, namely Health Claims Exchange and Bima Sugam, aiming to enhance insurance penetration and streamline claim procedures.
The Health Claims Exchange will digitize and simplify health insurance claims filing, while Bima Sugam will serve as an online marketplace catering to various insurance requirements. The successful implementation of the Insurance Law (Amendment) Bill 2023 is expected to stimulate economic growth and propel the insurance and healthcare sectors to new heights in India.
History of reforms in insurance sector
The insurance sector has undergone some major reforms in the last few decades. These reforms were aimed at increasing competition, improving consumer protection, and making insurance more accessible.
One of the most important reforms was the setting up of the Insurance Regulatory and Development Authority of India (IRDAI) in 1999. The IRDAI is a statutory body that regulates the sector. The IRDAI has helped improve the governance of the insurance sector and has made it more transparent and accountable.
Another major reform was the opening up of the sector to private players in 2000. Earlier, the insurance sector was dominated by the Life Insurance Corporation of India and the General Insurance Corporation of India. The opening up of the sector has led to increased competition and lower prices.
The government has also taken steps to simplify the insurance regulatory framework in recent years to make it easier for people to get insurance cover. For example, the government has introduced a number of new products such as microinsurance and health insurance that are designed to make insurance more accessible to people.
The insurance sector reforms in India have had a significant impact on the sector. The sector has seen tremendous growth in recent years, and it is become one of the largest insurance markets in the world. The reforms have also helped improve the quality of insurance products and services.