Centre offers issuance of one licence for all kinds of insurance

2 Dec 2022 , 01:28 PM

The finance ministry has proposed changes to the insurance laws – from granting insurers a composite licence to allowing them to sell different financial products and increasing the retirement age of the chairman and whole-time members of the IRDAI (Insurance Regulatory and Development Authority of India).

The Department of Financial Services has also proposed to allow the insurers to operate in multiple lines of business general, life, and health-without having to ask separate licences from the regulator for particular business, provided they meet the minimum capital requirements.

This would require an amendment to the Insurance Act, 1938.

Further, the regulator may register the applicant as an insurer and grant it a certificate of registration for such classes or sub-classes, if an applicant completes the eligibility criteria for different classes and sub-classes of business.

“Where the insurer carries on business of more than one class or sub-class of insurance, they shall keep a separate account of all receipts and payments in respect of each such class or sub-class, as may be specified by the regulations,” the DFS said in the proposed amendments, which were released earlier this week. 

It has invited the document to public comments to receive from all stakeholders till December 15. Class of insurance business refers to life, general, health, or reinsurance. And, sub-class of insurance refers to fire, marine and miscellaneous business general insurance; personal accident and including travel sub-classes of health insurance business.

The DFS has proposed that an insurance company be allowed to start business with a minimum paid up equity capital as may be specified by regulations, considering the size and scale of operations, class or sub-class of insurance business, and the category or type of insurer.

Many of these introduced amendments were part of the proposals that the insurance regulator had sent to the Centre ahead of the upcoming Budget session.

The DFS has said these changes would enhance the financial security of policyholders, promote their interests, and improve their returns. Besides, they would facilitate the entry of more players in the insurance market, leading to economic growth and employment generation.

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