{"id":97298,"date":"2021-03-23T21:53:35","date_gmt":"2021-03-23T16:23:35","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=97298"},"modified":"2021-03-23T21:53:35","modified_gmt":"2021-03-23T16:23:35","slug":"concerns-with-the-insurance-amendment-bill-2021","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/concerns-with-the-insurance-amendment-bill-2021\/","title":{"rendered":"Concerns with the Insurance (Amendment) Bill, 2021"},"content":{"rendered":"\n<p><strong>Synopsis:<\/strong>The Insurance (Amendment) Bill, 2021 has few important concerns. But the move is a welcome step to the Insurance sector.<\/p>\n<h5><strong>Introduction:<\/strong><\/h5>\n<p>The Lok Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill had earlier been cleared by the Rajya Sabha also. Now it only requires the presidential assent to become a law.<\/p>\n<h5><strong>About the Insurance (Amendment) Bill, 2021:<\/strong><\/h5>\n<ol>\n<li>The Bill amends the Insurance Act,1938. The Bill seeks to increase the maximum foreign investment allowed in an Indian insurance company from 49% to 74%.<\/li>\n<li>However, such foreign investment may be subject to additional conditions as may be prescribed by the Central Government. The conditions include,\n<ul>\n<li>The majority of directors on the Board and key management persons in health and general insurance companies has to be resident Indians.<\/li>\n<li>At least 50% of directors of the Insurance companies have to be independent directors.<\/li>\n<\/ul>\n<\/li>\n<li>The bill also removes restrictions on ownership and control.<\/li>\n<\/ol>\n<p><a href=\"https:\/\/forumias.com\/blog\/cabinet-clears-74-fdi-in-insurance-sector\/\"><strong>Click Here to Read more about the Insurance (Amendment) Bill<\/strong><\/a><\/p>\n<h5><strong>Concerns with the Insurance (Amendment) Bill:<\/strong><\/h5>\n<p>There are certain key concerns raised by the critics of the bill. These include,<\/p>\n<ol>\n<li>The <strong>present actual share of FDI<\/strong> in the insurance sector is less than the current limit of 49%. Further, the present target was aimed to achieve within 5 years. But that <strong>is not achieved<\/strong> so far. Hence, there is no justification for increasing the limit to 74%.<\/li>\n<li><strong>Infusion of market funds in the insurance sector is not viable<\/strong>. The critics mention the time when financial institutions like DHFL, Yes Bank have collapsed, infusing market funds<strong> might lead to the collapse of insurance institutions<\/strong> also.<\/li>\n<li>The Bill <strong>does not have a provision to prevent financially weak foreign companies<\/strong> from entering into the Indian insurance sector.<\/li>\n<li>Many Indian insurance companies are already in Joint Venture with foreign companies. Hence, the Government&#8217;s claim that foreign investment is needed for bringing newer technology to the country is not substantiated.<\/li>\n<\/ol>\n<h5><strong>Government\u2019s response to the concerns:<\/strong><\/h5>\n<ol>\n<li>The bill is aimed at solving some <strong>long-term capital availability<\/strong> issues in the insurance sector.<\/li>\n<li>The banking and insurance industry fall under the strategic sectors according to the government&#8217;s <a href=\"https:\/\/forumias.com\/blog\/strategic-disinvestment-policy-issues-and-challenges-explained\/\">strategic disinvestment policy<\/a>. The 74% cap is just a limit posed on the FDI. Hence, there should be no apprehension on privatization.<\/li>\n<li>The bill will increase competition in the insurance sector. This will in turn <strong>facilitate affordable schemes for middle-class<\/strong> people.<\/li>\n<li>Half of the market share of the Indian insurance sector is already held by private companies. The public sector insurance market share is merely 38.78%. On the other hand, the private sector enjoys 48.03% of the market share. So the increase in FDI is essential to improve the insurance penetration further.<\/li>\n<\/ol>\n<p>The Insurance (Amendment) Bill might facilitate insurance penetration among middle-class Indians. But the adequate safety mechanisms have to put in place to check the insurance companies.<\/p>\n<p><strong>Source: <a href=\"https:\/\/epaper.thehindu.com\/Home\/MShareArticle?OrgId=GC48DEKON.1&amp;imageview=0\">The Hindu<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Synopsis:The Insurance (Amendment) Bill, 2021 has few important concerns. But the move is a welcome step to the Insurance sector. Introduction: The Lok Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill had earlier been cleared by the Rajya Sabha also. Now it only requires the presidential assent to become a law. About the&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/concerns-with-the-insurance-amendment-bill-2021\/\">Continue reading <span class=\"screen-reader-text\">Concerns with the Insurance (Amendment) Bill, 2021<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1243,9],"tags":[1460,1302],"class_list":["post-97298","post","type-post","status-publish","format-standard","hentry","category-act-and-schemes-new","category-public","tag-eco_11","tag-eco_7","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700801523,"cached_date":1704666168},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/97298","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=97298"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/97298\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=97298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=97298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=97298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}