Govt. introduces Bill on insurance firms

What is the News?

The Government of India has introduced the General Insurance Business (Nationalisation) Amendment Bill, 2021.

Purpose of the Bill:

• The Bill introduces amendments to the General Insurance Business (Nationalisation) Act, 1972 to enable the privatisation of public sector insurance companies.

Key Features of the Bill:

• Reduces Shareholding Limit: The Bill removes a clause that requires the Centre to hold at least 51% shares in the public sector insurance companies.
  • Currently, there are four public sector general insurance companies — National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company Limited.
• Applicability of the Act: The bill includes a new section that states that the applicability of the Act ceases from the date the central government relinquishes control over an insurer.
• Liability of Director: The Bill makes the director of an insurer who is not a whole-time director liable for any acts of omission or commission committed with his knowledge and consent.

Significance of the Bill:

• The Bill will allow private participation in public sector insurance companies with the government reducing its shareholding.
• Moreover, the bill has tightened the noose around directors (other than whole-time directors).