Scrapping of the statutory Rs 100 crore startup capital for life and general insurance business and Rs 200 crore for reinsurance business, allowing different kinds of insurers including captives, changing the investment provisions are some of the major amendments proposed by the Indian government to the insurance laws.
The government also proposes to allow an insurer to provide services related or incidental to insurance business and distribute other financial products as specified by and subject to regulations.
The Department of Financial Services has put out the proposed amendments to the Insurance Act 1938 and the Insurance Regulatory and Development Authority Act 1999 and has called for comments/ suggestions.
As per the proposals, the government is scrapping the provision of the Insurance Act that stipulates the minimum capital of Rs 100 crore for life, general, health insurance companies and Rs 200 crore for reinsurers.
In the place of statutory provision, the government proposes the sectoral regulator — Insurance Regulatory and Development Authority of India (IRDAI) — the power to prescribe the minimum capital required considering the size and scale of operations, class or sub-class of insurance business and the category or type of insurer.
The government has also proposed to reduce the amount of net owned funds required for an insurer to be registered to Rs 500 crore from Rs 5,000 crore.
The government has also proposed to give the IRDAI the power to specify the qualifications and experience necessary for appointment of an actuary by an insurer by regulations.
The IRDAI may, by regulations, specify the duties and powers of the actuary so appointed by the insurer.
The government has also proposed to stipulate the minimum amount of motor third party insurance policies to be underwritten by standalone motor insurance companies that may be set up.