Insurance Laws (Amendment) Bill ‘2008

The Insurance laws (Amendment) bill, 2008 has designed to raise foreign investment cap from 26% to 49%.Passes of this bill is necessary for Insurance sector as this sector will need more capital in the future .Over the next five years IRDA estimates a need of Rs. 50’000 crore. This Rs. 50’000 crore are not going to come easily from Indian Capital Markets.

If this bill will pass, our country will get following benefits.

  • It will revive growth of our country
  • Passes of bill will push investment sentiment in positive direction.
  • If FDI goes up to 49%, foreign companies will bring more funds & more technology Capabilities

Following are the key amendments proposed in the Insurance Laws Bill 2008.

  1. Foreign equity cap is proposed to be kept at 49 per as against the 26 percent.
  2. Foreign reinsurers will be permitted to open branches only for reinsurance business in India and cannot invest directly or indirectly outside India the funds of policyholder.
  3.  In order to encourage health insurance in India, the capital requirement for a health insurance company has been proposed at Rs 50 crore .
  4. Public sector general insurance companies and GIC will be permitted to raise capital from the market to meet future capital requirements but the government’s shareholding should not fall below 51 percent.
  5. Appointment of agents is proposed to be done by insurance companies subject to the agents meeting the qualifications, passing of examinations etc. as specified by IRDA.
  6. The definition of ‘health insurance business’ has been revised so that health insurance policies would cover sickness benefits on account of domestic as well as international travel.
  7. Regarding the obligatory underwriting of third party risk on Motor Vehicles, a separate Motor Vehicle Insurance and Compensation Legislation is being proposed by the Government.