However, reinsurers are prohibited from seeking registration of any other class of insurance business. A composite license would allow insurers to undertake general and health insurance through a single entity.
sources said LIC Will take a comprehensive look at the overall licensing and other issues arising out of the passage of the Bill life insurance corporation act1956.
Sources said the bill, along with the proposed amendments to the Insurance Act 1938 and the Insurance Regulatory and Development Authority Act, 1999, is expected to be introduced in Parliament in the upcoming budget session beginning next month.
If the proposal for composite insurance registration is passed, there will be a change in the solvency margin and capital requirement for these companies.
The proposed amendments suggest that the minimum paid-up capital should be specified by the Insurance Regulatory and Development Authority of India (IRDAI) taking into account the size and scale of operations, class or sub-class of insurance business and class or type of insurer. As per the current law, the solvency ratio is 150 per cent, while the paid up capital is Rs 100 crore.
The Finance Ministry has recently circulated for comprehensive consultation on insurance legislation including reduction in minimum capital requirement with the objective of increasing insurance penetration, improving efficiency and enabling product innovation and diversification. Insurance penetration in India during 2021-22 was 4.2 per cent, remaining the same as in 2020-21. Insurance density in India to increase from US$ 78 in 2020-21 to US$ 91 in 2021-22. The level of insurance intensity has registered a steady increase from US$ 11.5 in 2001-02 to US$ 64.4 in 2010-11.
The proposed amendments are primarily aimed at promoting the interests of policyholders, improving returns to policyholders, facilitating the entry of more players in the insurance market, economic growth and employment generation, enhancing the efficiency of the insurance industry as well as enabling financial and Let’s focus. To do business
Currently, there are 24 life insurance companies and 31 non-life or general insurance firms, including specialized players such as the Agriculture Insurance Company of India Limited and ECGC Limited. Last year, the government made an amendment to the Insurance Act to allow an increase in foreign holding. From 49 percent to 74 percent among insurers.
Further, Parliament passed the General Insurance Business (Nationalisation) Amendment Bill, 2021, allowing the central government to reduce its holding of equity capital below 51 per cent in a specified insurer, paving the way for privatisation.
In 2015, the Insurance Act was amended to increase the foreign investment cap from 26 percent to 49 percent. All these reforms have led to exponential growth since the privatization of the insurance sector.