DFS work on draft insurance law complete, sent to Cabinet for approval

The department of financial services (DFS) has completed work on the draft insurance law amendment Bill and it will now be taken up by the Union Cabinet, a senior official told reporters here.

The amendments aim to enhance the security of policyholders, promote their interests, and improve returns. Besides, they would facilitate the entry of more players in the insurance market, leading to economic growth and employment generation, the official said.

Another senior official added that the draft Bill was unlikely to be introduced in the upcoming session of Parliament and is expected to be introduced in the monsoon session.

Responding to a question on the appointment of a chairman for the Pension Fund Regulatory and Development Authority, he added: “The last chairman, Supratim Bandyopadhyay, was a member (Finance) before getting appointed to the post. This time the chairman would be not from the full-time members as the only full-time member (Finance) has not applied for the post. The pension board has vacant positions for the full-time members of law and economics,” he added.

The Union finance minister and revenue secretary have met insurance companies’ CEOs on the issue of taxing premiums over Rs 5 lakh and the discussions are going on, said the officials.

“The provision is meant to tax the wealthy. The chairman of the PFRDA is to be appointed soon,” they added.

In the Union Budget, the finance minister announced that insurance policies where the premium was over Rs 5 lakh would no longer be exempt from tax. The life insurance industry sought an increase in this threshold to Rs 10 lakh.

The finance ministry has proposed a host of amendments to the insurance laws — from granting insurers a composite licence to allowing them to sell different financial products and increasing the retirement age of the chairman and whole-time members of the Insurance Regulatory and Development Authority of India.

The DFS has also suggested allowing insurers to operate in multiple lines of business — general, life, and health — without having to seek separate licences from the regulator for each, provided they meet the minimum capital requirements.

Tapan Singhel, managing director and chief executive officer at Bajaj Allianz General Insurance and chairman of general insurance council, said: “We support the composite licence as the council has a progressive stance and with more companies entering the sector, this will open up the market and will be beneficial in the long run for the insurance sector.”

Virtually addressing the 22nd Global Conference of Actuaries, Debasish Panda, chairman of Irdai, said with the introduction of the composite licence, the insurance sector will need more actuarial professionals to drive India towards universal coverage by 2047.

At the same event, Vivek Joshi, secretary of the DFS, said the insurance sector would need about 4,500 actuarial professionals by the end of 2025 and about 25,000 by 2030.

Proposed Changes

With composite licence arrangement, insurers will have more flexibility in operating in various insurance business

Relaxes minimum capital requirement for setting up insurance firms

Alters composition of life and general insurance councils

Raising retirement age of Irdai chairperson and whole-time members to 65