Proposed insurance law empowers regulator to run a modern industry

Welcoming the passage of the insurance bill in the Lok Sabha on Wednesday, the Indian insurance regulator said the new law was not only in tune with the changing times but also empowered him to run a modern insurance industry, said top official.

"The passage of the insurance bill by the Lok Sabha is good news. There is an urgent need for modernising the practice of insurance -- life, non-life and health. Though the old law -- Insurance Act 1938 -- has stood the test of time, it was formulated for governing the sector in a different era," T.S.Vijayan, chairman of the Insurance Regulatory and Development Authority of India (IRDAI), told IANS.

Apart from other provisions, the private players were largely interested in the law as it increases the foreign direct investment (FDI) limit to 49 percent from the current 26 percent.

He said that once the bill also gets the support of the Rajya Sabha then the law shall empower the regulator to run a modern insurance industry.

"The management of capital in the insurance sector would be more efficient now. Similarly, after the bill becomes law, the management expenses of the insurance companies would come down," Vijayan said.

He said that earlier health insurance was considered as part of the non-life insurance sector which was largely into insuring assets whereas health insurance is for human beings.

Once the bill becomes law, it shall provide for separate regulation for the health insurance sector.

According to him, allowing the foreign reinsurance players to open branch offices in India would see a drastic change in this sector.

Vijayan said several foreign companies are now showing keen interest in the Indian market.

"They are now looking for a strong Indian partner who is serious about the business," Vijayan said.