Introduction

The Insurance (Amendment) Bill, 2021 was introduced within the Rajya Sabha on 15 March 2021 by the Minister of Corporate Affairs Nirmala Sitharaman, which has currently been passed. This Bill amends the Insurance Act-1938. It provides a framework for the functioning of the insurance business and regulates all stakeholders associated with insurance. The recently projected legislation seeks to extend the most foreign investment limit in Indian insurance companies.

Insurance laws in India

• Insurance in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
• This establishment could be a statutory body authorized beneath the Insurance Regulatory and Development Authority of India Act-1999.
• It consists of one chairman and 5 members (2 full-time members and 3 part-time members). they are appointed by the government of India.
• Its head-quarter is found in Hyderabad.

The insurance market in India

• There are fifty-seven insurance companies in India's insurance industry, 24 are within the insurance business, whereas 33 are non-life insurers. Among the life insurers, the insurance Corporation of India (LIC) is that the sole public sector company. There are six public sector insurers within the non-life insurance segment.
• Apart from these insurance companies, the overall Insurance Corporation of India is that the solely national reinsurer. Alternative stakeholders within the Indian insurance market embrace approved insurance agents, commissioned company agents, brokers, general service centers, web-collectors, surveyors, and third-party administrators (TPAs) serving regarding insurance claims.
• Under the Insurance Laws (Amendment) Act, 2015, there has been a transparent provision to extend the foreign investment ceiling in the associate Indian insurance company from 26th to an overall limit of 49th and conjointly with the Indian possession and management are protected. Currently, the effort is to extend the limit to 74 by this new legislation.
• Insurance penetration in India, i.e. the premium received by Indian insurers has been 3.44% of Gross Domestic Product (GDP) within the financial year 2015-16. Under this, the per capita premium in India i.e. insurance density has been US $ 54.7 within the financial year 2015-16.
• In India, the market size of the insurance sector is calculable to be US$ 280 billion in 2020.
• During the financial year 2012 to 2020, new calling insurance companies in India raised the CAGR of 15 August 1945 in premium. Though Corona has negatively affected this increase.

Important points of every Bill: Key amendments

• The Bill Insurance Act-1938 provides that foreign investors will invest up to 49th of capital in an associate Indian insurance company. That is, the corporate ought to be closely held by Indians however this bill will increase this limit of foreign investment from 49th to 74 and removes the restrictions of possession and management. This foreign investment is also subject to further conditions such as by the Central Government.
• The Bill Insurance Act-1938 states that insurance firms can need to invest in assets to a minimum extent, that is spare to hide their insurance claims liabilities. This provision conjointly applies to an insurance company incorporated in India. If the company is incorporated in another country or settled in another country, then these assets ought to be controlled by a trust in India and under the authority of a trustee who could be a resident of India.

As per the clarification of the Act, this provision shall conjointly apply to an insurance company incorporated in India:

1. A minimum of 33rd of the capital is closely held by investors primarily based outside India,
2. Whose minimum of 33rd members of the governing body lives outside India.

III.          The most recent legislation repeals this provision in addition.

Recent Government Initiatives for Insurance Reforms

Government initiative

The Government of India has taken many initiatives to promote the insurance industry. some of them are as follows:

• According to the Union Budget 2019-20, 100 percent Foreign Direct Investment (FDI) was allowed for insurance intermediaries.
• In December 2020, Uttarakhand proclaimed its arrangement to supply a 'COVID-19 Insurance Policy' to international tourists.
• In November 2020, India Post Payments Bank (IPPB), in association with PNB MetLife India insurance company, proclaimed the launch of Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) for customers.
• IRDAI has allowed insurers to speculate up to 100 percent in further Tier one bonds issued by banks to extend their Tier one capital to expand the pool of qualified investors for banks.

The conclusion

India's insurance market could be a fast-growing market. Currently, 110+ Insurance Tech start-ups are operated in India. Together with this, insurance in India is said to the common life, therefore caution is important for picking this subject. Though the government itself is reducing its liability as an insurance company, it is still regulating the insurance through IRDAI and therefore the government is securing the funds of the Indian public.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.