Budget Session: Govt may present bill to amend Insurance Act

The Budget Session of Parliament is likely to see the government presenting a bill for the amendment of the Insurance Act, 1938, with the intent of attaining its goal of Insurance for All by 2047.

The draft bill is ready for approval of the Union Cabinet, following which the Finance Ministry plans to introduce it during the Budget Session, which runs from July 22 to August 12 this year. The Budget 2024 for FY25 is scheduled to be presented by Union Finance Minister Nirmala Sitharaman on July 23.

Currently, there are 32 general insurance firms and 25 life insurance companies in the country. The proposed bill aims at setting up a structure in the line of the banks, according to which insurance companies would be categorised just as the banking sector has universal banks, payments banks and small finance banks.

Amendments being recommended in the bill pertain to a wide range of subjects including one-time registration for all intermediaries, bringing down solvency, captive licencing, composite licencing, differential capital, regulations changes and giving permission to insurance companies to deal in other products, a report in Mint said.

Composite licencing is something that the Insurance Regulatory and Development Authority of India (IRDAI) currently does not allow. According to the Insurance Act, 1938, life insurance companies can offer just life insurance cover while general insurance companies can offer policies for products including health, fire, motor and marine. When the bill is passed, all life insurance firms would be able to deal in life insurance as well as general insurance policies.

The amendment proposals also include the scope for relaxed capital norms, which in turn could lead to the growth of agriculture insurance, micro-insurance and regional insurance in the country, according to reports in the media.