Amended Insurance Bill - Changes and Benefits

Amended Insurance Bill – Changes and Benefits

The Insurance Laws (Amendment) Bill, 2008 has been approved by the Cabinet and moved to Rajya Sabha for further consideration. It consists of over a hundred clauses, and many of them will bring about substantial changes to our earlier policies.

Facts about the Insurance Sector

Currently, there are 24 Life insurance companies and 28 non-Life insurance companies in India

At the end of September quarter of 2014, there were 21.5 lakh insurance agents. This figure has seen a steady decline and at the end of Fiscal Year 2011 this figure was around 26 lakh

For a Life insurance company, 90% of its business is generated through its agents

Major Changes to be brought by the Bill

The Bill seeks to increase the FDI (Foreign Direct Investment) cap from 26% to 49%, and this is done to attract foreign investment in the Indian economy.

The above cap of 49% will cover all types of foreign direct investments and foreign portfolio investments

Insurance companies will also have the authority to appoint agents. Earlier, this was under the sole authority of IRDA (Insurance Regulatory and Development Authority)

The period allowed for the rejection of any policy has been limited to 3 years. So any claims made after 3 years cannot be rejected on any grounds including misstatement of facts

Insurance companies will now have to provide e-records of their policies and claims on their websites

Benefits to Industry and Policyholders

As per the latest official release, “The Bill is aimed at removing archaic and redundant provisions in the relevant legislations and to enable the insurance sector to work for the betterment of the insured with greater efficacy.”

As a policyholder you stand to benefit because your claims cannot be rejected by the company on any grounds after a period of 3 years

Insurance sector is estimated to attract Rs 25,000 crore through foreign funds

Increase in the number of agents is expected as the appointment authority will be granted to the insurance companies too. This is further expected to help in deeper market penetration which is most needed in a largely under-penetrated market that we have in India.