Parliament Standing Committee Validates Reforms Proposed In Insurance Bill

Parliament Standing Committee Validates Reforms Proposed In Insurance Bill

The IRDAI proposed amendments that are under consideration by the Finance Ministry

A parliamentary standing committee on finance has endorsed insurance sector reforms proposed in the Insurance Amendment Bill, including the issuance of a composite licence and reduction in capital requirement.

The report read: "The committee notes that the Insurance Regulatory and Development Authority of India (IRDAI) has proposed amendments to the Insurance Act, 1938, allowing for composite insurance businesses, and the same is under consideration of the Ministry of Finance. The committee expects the ministry to expedite it to enable the insurer to offer life and non-life products.”

The Centre has prepared a draft bill seeking amendments to the Insurance Act, which includes raising the Foreign Direct Investment (FDI) limit to 100 percent from the current 74 percent. The amendments have been proposed for the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.

The committee also urged the Goods and Services Tax (GST) rate cuts for health and micro-insurance and a roadmap for public sector insurers.

Regarding GST on health insurance and microinsurance products, the parliamentary committee said it was glad that the IRDAI agreed with its recommendation for reducing the rates.

It added, “The Department of Financial Services also supports this proposal,” and the finance ministry should coordinate so that a decision is taken.

On the financial health of the four public sector general insurers, the committee recommended an appropriate strategic roadmap to implement the intended remedial steps for the companies to improve their competitiveness and enable them to attract sufficient capital and talent to grow.

It suggested setting up an inter-ministerial working group to cover gaps in the health insurance sector and formulate and execute a comprehensive plan.

The report further stated that an inter-ministerial working group with participation from IRDAI, the National Health Authority (NHA), and concerned agencies, consumers, healthcare providers, and healthcare insurance firms should be established to develop a long-term plan to cover all sections of society with tailored government and private sector health insurance solutions.

Meanwhile, in another report, the standing committee recommended creating a central Cyber Security Protection Authority, mirroring the role of the Directorate General of Civil Aviation (DGCA) in aviation.