Insurance Amendment Bill likely in Winter session, says FM Sitharaman

Insurance Amendment Bill, which proposes 100 per cent FDI in the insurance sector, is likely to be introduced in Parliament in the upcoming Winter session, Finance Minister Nirmala Sitharaman has said.

The winter session of Parliament generally commences in the second half of November and concludes before Christmas.

"I hope to", she told PTI when asked if the bill to further liberalise FDI in the insurance sector can be introduced in Parliament in the upcoming Winter session.

The finance minister, in this year's Budget speech, proposed to raise the foreign investment limit to 100 per cent from the existing 74 per cent in the insurance sector as part of new-generation financial sector reforms.

"This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified," she had said.

So far, the insurance sector has attracted Rs 82,000 crore through foreign direct investment (FDI).

The finance ministry has proposed to amend various provisions of the Insurance Act, 1938, including raising foreign direct investment (FDI) in the insurance sector to 100 per cent, a reduction in paid-up capital, and a provision for a composite licence.

As part of a comprehensive legislative exercise, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999 will be amended, alongside the Insurance Act 1938.

The amendments to the LIC Act propose to empower its board to take operational decisions like branch expansion and recruitment.

The proposed amendment primarily focuses on promoting policyholders' interests, enhancing their financial security, and facilitating the entry of more players into the insurance market, leading to economic growth and employment generation.

Such changes will help enhance the efficiency of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve the goal of 'Insurance for All by 2047'.

The Insurance Act of 1938 serves as the principal Act to provide the legislative framework for insurance in India. It provides the framework for the functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, shareholders and the regulator Irdai.

The entry of more players in the sector would not only push penetration but also result in greater job creation across the country.

Currently, there are 25 life insurance companies and 34 non-life or general insurance firms in India, including specialised general insurance companies like Agriculture Insurance Company of India Ltd and ECGC Ltd.

The FDI limit in the insurance sector was last raised -- from 49 per cent to 74 per cent -- in 2021. In 2015, the government hiked the FDI cap in the insurance sector from 26 per cent to 49 per cent.  She also said that the GST reforms are a huge victory for each and every citizen of the country.

Taking into account that every state in India has their own festivals, it has been decided to implement the GST reforms much ahead of Prime Minister Narendra Modi's instruction of launching them before Deepavali festival, Sitharaman said at an event in Chennai.

In her address at the event, "Tax Reforms for Rising Bharat' organised by Chennai Citizens Forum, she said the beneficial impact of Goods and Services Tax would be there for all products from the start of the day till people go to bed.

Explaining some of the key initiatives, Sitharaman said 99 per cent of all the goods which were earlier taxed 12 per cent under GST have now been reduced to 5 per cent.

The latest set of GST reforms are set to come into force from September 22.