Nov 04 2008
Indian government approves insurance bill
The Indian government finally succeeded in clearing the much anticipated insurance amendment bill which was aimed towards increasing the foreign direct investment or FDI in the private insurance sector to 49% from the present value of 26%. The bill will now be tabled in the Rajya Sabha of the Parliament during its December session and will be open for discussion then as the present parliament session does not provide the bill enough time to be discussed and understood in depth and in detail.
The bill which is the insurance amendment bill 2008 aimed towards amending the Insurance act 1938, the general insurance business act 1972 and the Insurance regulatory and development act 1999 was approved after taking into consideration the recommendations provided by a Group of Ministers(GoM) who were asked to look into the suggestions laid out by the KP Narashimhan committee and the Law commission. I strongly believe the amendments are clearly aimed towards removing old, not usable redundant provisions from the legislation and subsequently would move towards incorporating flexibility to the IRDA which would allow it to function smoothly and efficiently in sync with the changing times.
This discussed provision would however not be applicable to the public sector insurance companies and would apply to private sector insurance companies where on agreement with their private partners the insurance companies can now be allowed to increase their stake in FDI from the present value of 26% to reach a much higher value of 49%. The union cabinet in the same meeting also approved the bill meant to increase the share capital of Life Insurance Company or LIC from its present value of 5 crores to 100 crores. This life insurance amendment bill 2008 will be introduced in the Lok Sabha while the other previously mentioned bills will find their way to the Rajya Sabha for discussion in December.