The Insurance Laws (Amendment) Bill

The Insurance Laws (Amendment) BillIn India, insurance companies are not permitted to have foreign holding of more than 26%. This Bill raises the limit to 49% and allows entry of foreign re-insurers (companies that insure insurance companies). It also provides for permanent registration of insurance companies. It permits the holder of a life insurance policy to name the beneficiary.Important features of Insurance Laws (Amendment) Bill-1) The Insurance Laws (Amendment) Bill has raised the foreign investment cap in the sector from 26 per cent to 49 per cent. According to the Bill, the cap on foreign investment will include all forms of foreign direct investment (FDI), foreign institutional investment (FII) and foreign portfolio investment.2) The revised section 45 in the Bill says no claim can be repudiated after three years of the policy being in force, even if a fraud is detected. This will mean customers who have been miss-sold a policy can get their claims passed even if discrepancies are seen in the policy or claim.3) The minimum capital for health insurance companies will be Rs 100 crore, against the proposed Rs 50 crore. This will mean only serious companies enter this business.4) Health insurance has been defined as contracts that provide for sickness benefits or medical, surgical or hospital expense benefits, in-patient or out-patient travel cover and personal accident cover.5) Indian management control has been proposed. Clarity is awaited on what this will mean and whether there will be a cap on voting rights.6) Insurers can approach the Securities Appellate Tribunal for redressal of grievances against the Irda Section 40A of the insurance Act, which relates to agent commission limits,has been omitted in the Bill. Irda will have to bring out fresh norms for agent commission and caps thereof.Why in News- The Union Government has decided to issue Ordinance for insurance law amendment bill after our parliament has failed to clear the bill in winter session.Suggested question for Prelims-Ordinance making power of President (Article and validity of ordinance)Extent of FDI allowed in Insurance sector.Suggested question for Mains-The Insurance sector reforms are key of contention since long. What are the major issues with it and also what are the major features of recently presented Isurance Law Amendment Bill.