The Insurance Regulatory and Development Authority of India (Irdai) has set up a seven-member committee to examine proposed amendments to the Insurance Act, 1938 and suggest ways to implement them. This committee is led by Dinesh Khara, former chairman of the State Bank of India (SBI).
Key Proposals Under Review
The finance ministry has suggested several changes to the Act, including:
- Increasing foreign direct investment (FDI) in the insurance sector to 100% (from the current 74%).
- Reducing the required paid-up capital for insurance companies.
- Introducing a composite licence, which would allow insurers to offer multiple types of insurance (life, general, and health) under a single licence.
Who Are the Committee Members?
Apart from Dinesh Khara, the committee includes:
- N Kannan – Former CEO of ICICI Prudential Life Insurance.
- Saurabh Sinha – Former Executive Director of the Reserve Bank of India (RBI).
- Girish Radhakrishnan – Former Chairman & Managing Director of United India Insurance.
- Alok Mishra – MD & CEO of Micro Finance Institutions Network (MFIN).
- Rakesh Joshi – Former Irdai member.
- L Vishwanathan – A legal expert.
Committee’s Role and Mandate
Sources in the insurance sector clarified that the committee will not propose new amendments but will focus only on those already suggested by the finance ministry.
Once the Insurance Act is amended, it will provide a framework for key reforms, such as:
- Allowing 100% FDI in insurance.
- Encouraging higher insurance penetration.
- Simplifying the entry of new players in the market.
“The committee’s role is to set clear boundaries and determine how the proposed amendments can be enabled through regulations and circulars,” said an industry insider.
Government’s Push for Insurance Sector Reforms
In the Union Budget, Finance Minister Nirmala Sitharaman had announced the proposal to raise the FDI limit in insurance to 100%. She also stated that the government is working on more reforms to strengthen the sector.
Last week, M Nagaraju, Secretary, Department of Financial Services (DFS), confirmed that internal consultations on the Insurance Amendment Bill are almost complete. The bill will also cover investment rules, profit repatriation in case of FDI, and the introduction of a composite licence.
Next Steps
- The government will finalize the draft of the Insurance Amendment Bill.
- The bill will be presented in Parliament for approval.
- Once passed, new regulations will be notified, paving the way for reforms to improve insurance penetration in India.
With these changes, India’s insurance sector is set to witness significant transformation, attracting more foreign investments and increasing access to insurance services across the country.
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