The government plans to introduce legislation during Parliament’s monsoon session beginning on 20 July to implement comprehensive reforms in the insurance sector.
Under this move, the government is expected to introduce two pieces of legislation—the Insurance Laws (Amendment) Bill, 2023, and the Insurance Bill, 2023. The Department of Financial Services has announced that the amendments will be discussed during the forthcoming session of Parliament.
The major amendments will cover:
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Issuance of composite insurance licences: Life, general, and standalone health insurance companies will be allowed to venture into different sub-segments of the insurance business, such as motor, health, accident, protection, annuity, or endowment. This cross-entry will promote competition, flexibility, and integration within the Indian insurance sector.
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Lower initial capital in setting up an insurer: The insurance regulator intends to reduce the minimum initial capital required to establish an insurance business on a case-by-case basis, encouraging niche companies and InsurTech firms to enter the market.
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Distribution of other financial products: Insurers may be granted permission to distribute various financial products, including mutual funds, loans, credit cards, and bank deposits.
- Investment regulations: The government proposes empowering the IRDAI to adjust limits for different categories of investments by insurers. Currently, insurers must invest a minimum of 50% in government securities and 15% in equities.
- Captive insurance licence: Conglomerates will be permitted to establish captive insurance subsidiaries.
