One licence for all insurance: Bill likely in budget session

The government is likely to introduce the Insurance Laws (Amendment) Bill, 2022, which will pave the way for issue of composite licence to insurers, in the budget session of Parliament, officials said.

A composite licence, which will allow insurers to undertake general and health insurance via a single entity, has been a key industry demand. Tax breaks, jobs or plan to beat China: What will Budget 2023 offer? Click to know
“Our aim is to bring the legislation in the budget session. It, however, will depend on how swiftly we can incorporate suggestions and seek cabinet approval for the proposed legislation,” said a senior official aware of the developments.

Last week, the finance ministry invited comments on amendments proposed to the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999. “The proposed amendments primarily focus on enhancing the financial security of the policyholders, promoting the policyholders' interests, improving returns to the policyholders, and facilitating the entry of more players in the insurance market, leading to economic growth and employment generation," the ministry said while seeking comments from all stakeholders. The last date for sending comments is December 15.


Another official said that since the proposed amendments have been made after extensive consultation with industry and the regulator, they don’t expect any delays. “Hopefully, by the end of the winter session, all approvals will be in place, and subsequently it could be announced and approved during the budget session,” he said.

The bill proposes to remove the Rs 100-crore minimum paid-up equity capital requirement for carrying out life, general and health insurance business, as part of a significant revamp of insurance framework.

The ministry, while inviting comments, had noted that the aim is to enhance efficiencies of the insurance industry — operational as well as financial — and enable ease of doing business. “The proposal includes various measures such as opening up registration to various classes, sub-classes and types of insurers with appropriate minimum capital requirements as specified by (sector regulator) Irdai,” it said.

This is being done in view of the changing needs of the insurance sector, the ministry said. Areview of the legislative framework governing the sector has been done in consultation with the Insurance Regulatory and Development Authority of India and the industry, it said.