Following are the key amendments proposed in the Insurance Laws Bill 2008, chief among them being increasing the cap on foreign equity in insurance companies to 49% from 26% earlier.
Following are the key amendments proposed in the Insurance Laws Bill 2008.
1. Foreign equity cap is proposed to be kept at 49 per cent as provided in the Insurance Laws (Amendment) Bill, 2008 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 instead of Rs 100 crore for General Insurance companies.
4. 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.
5. 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.
6. The period during which a policy can be repudiated on any ground, including misstatement of facts etc. has been confined to three years from the commencement of the policy and no policy would be called in question on ground of misstatement after three years.
7. Public sector general insurance companies and GIC will be permitted to raise capital from the market to meet future capital requirements, provided that the government’s shareholding does not fall below 51 percent.
8. 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. While the licensing of agents be no longer with IRDA, the Authority is empowered to take action against agents.
9. To specify fine on intermediaries and insurance companies for misconduct of intermediaries and to make appropriate provision in the legislation to effectively deter multilevel marketing of insurance products in the interest of policyholders, and to curtail the practice of mis-selling.
10. In order to improve the functioning of surveyors and bring in greater transparency, certain modifications are made to provide for regulations on qualifications regarding appointment of surveyors and to strengthen the Institute of Indian Insurance Surveyors and Loss Assessors
11. The commission structure and the Code of conduct for agents is to be specified by regulations by the IRDA and accordingly, ceilings on commission in the Act have been done away with and the insurance companies along with the agents are made liable for any violation of the regulations and stiff penalties have been provided for mis-selling, rebating and marketing of products through multi level marketing schemes.