Millennium Post

Insurance Bill clears Lok Sabha hurdle, over to RS

Insurance Bill clears Lok Sabha hurdle, over to RS
The long-pending Insurance bill, a key economic reform legislation providing for raising foreign investment cap to 49 per cent, was on Wednesday passed by Lok Sabha with the Narendra Modi-government insisting that the measure is crucial for expanding the penetration of insurance in the country. The controversial Insurance Laws (Amendment) Bill, which seeks to replace an ordinance, also provides for imprisonment of up to 10 years for selling policies without registration with the regulator Insurance Regulatory and Development Authority (IRDA).

Justifying the decision to raise the cap from 26 per cent, minister of state for finance Jayant Sinha said the country needs this as “our insurance penetration is low”. Responding to concerns expressed by members about the fate of the poor, he said the measure takes care of the interests of even the poor. “We brought important safeguards that will protect full interest of people (insured),” he said.

Objecting to the Bill Trinamool Congress leader Saugata Roy said, “In any case it (the Bill) will get stuck in Rajya Sabha. So let him (Sinha) show the broadness of vision, let him legislate on the insurance sector as a whole, including life insurance and let him not allow the FDI to infiltrate into this very vital sector of the economy.”

Speaking against hiking the FDI cap from existing 26% to 49%, he said, “If you compare LIC lapsing with private industry, more than 99% settlements of the claims and more than 99% of death claims this is the performance of LIC. Now, the private sector Future Generali 49%, Prudential 42%, Reliance 38%, Bharati AXA 36%.

The proposed legislation will also allow PSU general insurers to raise funds from the capital market and provides for increased penalty to deter multilevel marketing of insurance products. The bill, one of the key reform legislations, has been pending since 2008.

For the poor, the minister said the government is bringing many different policies. He said more and more FDI is required in the sector to provide more coverage to people of India. Responding to questions posed by members, the Minister noted that in the banking sector, the FDI cap was 74 per cent and wondered why it cannot be increased in insurance sector.

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