New Delhi. The government may introduce a bill to amend the Insurance Act, 1938 during the upcoming budget session to achieve the goal of ‘insurance for all by 2047’. Sources said some of the provisions that may be included in the amendment bill include composite license, differential capital, relaxation in solvency norms, issuance of captive license, changes in investment rules, one-time registration for intermediaries and allowing insurance companies to distribute other financial products.
The move is likely to allow entry of differentiated insurance companies like in the banking sector. The banking sector is currently classified as universal banks, small finance banks and payments banks. The provision of composite licence will allow life insurance companies to ‘underwrite’ health insurance or general insurance policies. As per the provisions of the Insurance Act, 1938, life insurance companies can provide only life insurance cover, while general insurance companies can offer non-insurance products such as health, motor, fire etc.
IRDA does not allow composite licensing for insurance companies. In such a situation, an insurance company cannot provide both life and non-life products as a single entity. Sources said that the draft of the bill is ready and it has to be sent to the Cabinet for approval. He said that the Finance Ministry hopes that it will be introduced in the upcoming session.
Sources said that the proposed amendments mainly focus on promoting the interests of policyholders, improving returns to policyholders, facilitating the entry of more participants, promoting economic growth and employment generation, increasing the operational and financial efficiency of the insurance industry and ease of doing business. The Finance Ministry had invited comments on the proposed amendments to the Insurance Act, 1938 and the Insurance Regulatory Development Act, 1999 in December 2022.