The revised Insurance Laws (Amendments) Bill proposes to retain foreign direct investment (FDI) limit in insurance sector at 26% from49% proposed earlier. However, the Bill has provision of procedural modification to allow the entry of Lloyd’s— global specialist insurer—in India.Insurance Regulatory and Development Authority (IRDA) will frame it while formulating suitable regulations for the registration of companies.
The modifications would be carried out in relation to China where Lloyd’s works as a company and only such syndicates which have underwriting desks in the country should be allowed to carry on re-insurance business. Thus, formulation of a foreign company is being changed to allow Lloyd’s investment. However, for consumer protection, it will limit investment of funds of policyholders in the country.
The Standing Committee was concerned that the increased role of foreign capital may lead to the possibility of exposing the economy to vulnerabilities of global markets which may lead to capital flowing outside the country and also endanger the interest of policyholders.
The Insurance Bill has accepted the following proposal which includes foreign equity capital at 26%; sickness benefits due to domestic and international travel; life insurers can offer health cover; opening local offices of foreign re-insurers and public sector insurers to raise money from the market among others.
However, the Insurance Bill has not accepted some proposals which comprise minimum paid up equity requirement to at Rs 50 crore in case of insurers carrying on exclusively the business of health business. The Committee had proposed Rs 100 crore. The Bill also did not accept statutory protection on payment of commission to agents and committee’s recommendation for retaining the licensing of agents by IRDA.