General Insurance Business (Nationalisation) Amendment Bill passed

Lok Sabha passed the “General Insurance Business (Nationalisation) Amendment Bill through a voice vote on August 2, 2021 without any debate.

Highlights

• General Insurance Business (Nationalisation) Amendment Bill, 2021 will allow government to lower down its stake in State-owned general insurance companies and generate required resources.
• It will also help public sector general insurers design innovative products.

Amendments to the bill

• Proposed amendments to the Bill meant for removing mandatory requirement of Central government holding not less than 51 percent of the equity capital in a specified insurer.
• As per the Bill, amendments had become necessary to attract larger private participation in public sector insurance companies, enhance penetration of insurance sector and to provide social protection by securing interests of policyholders.

Background

This bill was passed in line with government’s privatization drive. Finance minister Nirmala Sitharaman has announced ambitious privatisation agenda, including two public sector banks and one general insurance company in ger budget speech for 2021-2022. Accordingly, among four public sector general insurance companies namely, National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Limited and United India Insurance Company Limited; government will dilute its shareholding in one company. Name of the company is yet to be finalised.

General Insurance Business (Nationalisation) Amendment Bill, 2021

This bill was introduced in Lok Sabha on July 30, 2021.  It seeks to amend General Insurance Business (Nationalisation) Act, 1972 that was enacted to nationalise all private companies undertaking general insurance business.  Bill provides for a greater private sector participation in public sector insurance companies that are regulated under the Act of 1972. Bill has removed the government shareholding threshold of 51% in specified insurers.   Bill has also changed the definition of general insurance business and transferred the power of appointing majority of directors of specified insurer & power over its management or policy decision from the government.

Month: Current Affairs - August, 2021