Insurance Amendment Bill

December 7, 2024

A parliamentary committee has endorsed reforms in the insurance sector, aiming to enhance the industry’s efficiency and competitiveness. The Insurance Amendment Bill proposes several key changes.

Composite Licenses for Insurers

The committee supports allowing composite licenses. Insurers would be able to offer both life and non-life products under one license. This change aims to simplify operations and expand product offerings.

Capital Requirements Reduced

Lowering capital requirements for insurers is another recommendation. This move will make it easier for new players to enter the market. It will also encourage existing insurers to innovate and diversify.

Increased Foreign Investment Limit

The proposed reforms include raising the foreign investment limit. Currently set at 74%, it would increase to 100%. This change is expected to attract more foreign capital into the insurance sector.

GST Rate Reductions

The committee has called for reduced GST rates. Specifically, it targets health and microinsurance products. The Insurance Regulatory and Development Authority of India (IRDAI) supports this initiative. Collaboration with the finance ministry is essential for timely implementation.

A strategic plan for public sector general insurers is recommended. This plan aims to improve competitiveness and attract investment. Retaining skilled employees is also a priority. A working group is proposed to develop long-term health insurance solutions.

Cyber Security Protection Authority Proposal

The committee suggests creating a Cyber Security Protection Authority. This authority would oversee cybersecurity issues in the insurance sector. It would function similarly to the Directorate General of Civil Aviation (DGCA) for aviation safety.

The committee urges the Ministry of Finance to act swiftly. Implementing these recommendations will help modernise the insurance sector. It aims to benefit consumers and enhance overall market performance.

GKToday Facts for Exams:
IRDAI: The Insurance Regulatory and Development Authority of India regulates the insurance industry. It aims to protect policyholders and promote fair competition among insurers in India.
Composite Licenses: Composite licenses allow insurers to offer both life and non-life products. This simplifies operations and enhances product diversity, benefiting consumers and promoting market efficiency.
Cyber Security Protection Authority: This proposed authority would oversee cybersecurity in the insurance sector. It aims to ensure data protection and security, similar to aviation safety management by the DGCA.
GST: Goods and Services Tax (GST) is tax reform in India. The committee recommends lowering GST rates on health and microinsurance to enhance affordability and accessibility.

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