The central government is set to introduce the Insurance Amendment Bill in the ongoing Winter Session of Parliament, bringing transformative reforms to the insurance sector. 

According to a CNBC-TV18 report, here are the five key changes that could soon take effect:

Composite Insurance Licenses

The bill proposes the introduction of a composite insurance license, allowing life insurers to offer general insurance products like motor and health insurance, while general insurers can enter the life insurance market.

What it means

This move will foster greater flexibility, integration, and competition in the sector. Insurers will be able to expand their product portfolios, giving consumers access to a wider range of options, all under one roof.  Insurers might be permitted to offer other financial products like mutual funds, loans, bank deposits, etc. 

Distribution of Other Financial Products

The bill may enable insurers to distribute a wider variety of financial products, including mutual funds, loans, credit cards, and bank deposits.

What it means

This will unlock new revenue opportunities for insurance companies, positioning them as comprehensive, one-stop financial solution providers and offering more convenience to consumers. 

Reduction in Initial Capital Requirements

The Insurance Amendment Bill proposes a reduction in the capital needed to start an insurance business. Currently, insurers must have ₹100 crore, and reinsurers ₹200 crore in initial capital. Under the new bill, the capital requirements will be adjusted based on the size and scale of the company.

What it means:

This change will lower the barriers to entry, allowing smaller, niche, and specialized companies to enter India’s insurance market, fostering greater competition and innovation.

Captive Insurance Licenses

Large corporations and conglomerates will soon be able to set up captive insurance companies to manage their risks.

What it means:

This move empowers businesses to take control of their risk management, reducing reliance on traditional insurance providers and potentially lowering costs.

Relaxation of investment regulations

The government is also planning to allow 100% foreign direct investment (FDI) in the insurance sector, increasing from the previous cap of 74%. If implemented, this will allow bigger players to enter into the market.

What it means

This change will enhance the IRDAI’s flexibility to align investment regulations with market dynamics, optimizing returns for policyholders.

Bottom Line

The Insurance Amendment Bill is set to make waves in the upcoming Winter Session of Parliament, with experts calling it one of the boldest reforms ever in India’s insurance sector. Stay tuned for transformative changes that could reshape the future of insurance in the country!

Insurance Regulatory and Development Authority of India (IRDAI) chairman Debasish Panda recently promoted the "Insurance for All by 2047” vision which aligns with the government’s goal of increasing insurance coverage in the country