Upcoming Insurance Laws Amendment Bill To Introduce Composite Licences for Insurers

The Insurance Laws (Amendment) Bill, 2022 is expected to be introduced in the budget session of Parliament.

The bill aims to allow insurers to offer both general and health insurance under a single license, known as a composite license. This has been a key demand of the insurance industry.

“Our aim is to bring the legislation in the budget session. It, however, will depend on how swiftly we can incorporate suggestions and seek cabinet approval for the proposed legislation,” a senior official aware of the developments was quoted by Economic Times as saying.

The proposed legislation is expected to focus on improving financial security for policyholders, promoting policyholders' interests, and facilitating the entry of more players in the insurance market.

The finance ministry is currently seeking comments on the proposed amendments to the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999.

The Bill proposes to remove the requirement for a minimum paid-up equity capital of Rs 100 crore for providing life, general, and health insurance services. This is part of a broader overhaul of the insurance framework.

The ministry, while seeking comments on the proposed amendments, noted that the aim is to improve the efficiency of the insurance industry and make it easier to do business.

The proposal includes measures such as opening up registration to various classes, subclasses, and types of insurers with appropriate minimum capital requirements. This is being done in response to the changing needs of the insurance sector.

A review of the legislative framework governing the sector has been conducted in consultation with the industry and the sector regulator, IRDAI.