Finally the long awaited Insurance Bill was passed in the Rajya Sabha on 12th March, 2015 – thereby bringing us one step closer to the Amendment Act.
Introduced in Lok Sabha on 4th March, 2015 the Amendment Bill started its journey as an ordinance in December 2014.
The Insurance Ordinance, now the Insurance Bill sought to primarily amend the three major Insurance Acts – giving effect to various new provisions and propositions.
2. The Insurance Regulatory and Development Authority Act, 1999 – popularly known as the IRDA Act.
Introduced in Lok Sabha on 4th March, 2015 the Amendment Bill started its journey as an ordinance in December 2014.
The Insurance Ordinance, now the Insurance Bill sought to primarily amend the three major Insurance Acts – giving effect to various new provisions and propositions.
The three Acts to be amended as per the new Bill are:
1. The Insurance Act, 19382. The Insurance Regulatory and Development Authority Act, 1999 – popularly known as the IRDA Act.
3. The General Insurance Business (Nationalisation) Act,
1972.
The amendments or the salient features of the Insurance Bill are as follows:-
- Most
important and trending topic – The Bill increases the FDI cap in Insurance
Sector to 49% (from the earlier 26%).
Of the 49% - 26% shall be under the
FIPB is Foreign Investment Promotion Board.
- And
that Foreign Re-insurers will be able to enter the Indian re-insurance
sector which only had the Government owned GIC.
Recent news has it that
- Another
measure for the insurance companies in respect of raising capital is the
opening of capital market to the public sector general insurance
companies.
- And
the start up capital (initial capital – required at the time of
registration of the company and start of business subsequently) for a
health insurance business will be Rs. 100 crore.
- Insurance
Agents will be fined Rs. 1 crore for mis-selling insurance products. Now
that’s a relief to the insureds (us the customers) who most of the time
have no idea which insurance product is actually the right one for them.
Also, unauthorized agents – whose only job is to dupe unsuspecting customers – will be fines Rs. 10 lakhs for their scams.
And the customers (insureds) can utilize legal course for the redressal of their grievances.
- Agents
are now prohibited from acting as agents of more than one company for the
same business segment. That is – one agent cannot be a life insurance
agent of more than one life insurance company.
He can a life insurance agent and a general insurance agent of the same company – as life and general insurances are two separate line/business segments.
- Life
Insurance Companies too have been prohibited from challenging any life
insurance policy on any ground after three years of having sold such
policy.
- Life
Insurance Council and the General Insurance Council will be empowered to act
as self-regulating bodies for their respective segment of insurance
businesses and the companies operating in the particular line of business.
- For
the customers (insureds) – faster premium payment and processing, faster
claims processing and faster and just redressal has been envisaged and
provided for.
- IRDA
has been given more regulatory powers to control any misuse of this sector
to dupe the masses; non-compliance of IRDA rule and regulations can result
in Rs. 25 crores in fines for companies!
So customer protection has been given a clear priority.
There you have it 10 important features of the Insurance Laws Amendment Bill, 2015; all of these bulleted points will have effect when the earlier mentioned three Acts are amended.
That is all for today.
Have a good one!
