Ball in North Block court on insurance Act

The finance ministry will decide whether there will be a fresh legislation to formulate a new insurance Act so as to scrap the Insurance Act 1938 or modify the Act after taking into consideration the recommendations made by the Law Commission.

The Insurance Regulatory Development Authority (Irda) and the Life Insurance Council are of view that a brand new insurance Act is needed by the sector, which would take into consideration the dynamic changes happening in the industry.

Two years ago the finance ministry had mooted the idea for a new insurance legislation in the place of the outdated Insurance Act 1938. A preliminary draft on the recommendations of Insurance Act 1938 has been prepared by the law commission.

The Law Commission has submitted its recommendation to the winter session of Parliament last month.

C S Rao, chairman, Irda, told Business Standard, "Some provisions in the Insurance Act 1938 are outdated and have no relevance to the insurance sector in 2005. It will be advantageous if a legislation is passed for a new Act rather modify the old Act."

"There has been a lot of amendments made to Insurance Act of 1938, it is time to have a fresh legislation which will take into consideration the changes happening in the insurance industry, said S V Mony, secretary general of the Life Insurance Council.

There has been significant changes happening in the insurance sector with the entry of private players.

The participation of the private players has changed the nature of the industry by enlarging the scope of insurance from a mere tool of tax concession to an investment option.