The Indian Insurance industry will be impacted by the Insurance Bill that was passed in both houses in March 2015. This amendment was eagerly awaited and much anticipated. It offered many benefits for both the Insurance Company as well as the policy holder. The Insurance Bill’s key features include increased power for regulatory bodies, greater protection for policy holders, and higher levels of foreign investment in this sector.
Here are some highlights from the bill that can impact you.
Increased Foreign investment: From now onwards, up to 49% foreign capital can be invested in Indian insurance companies. The industry will be revitalized by this increased capital flow. National players will now be able invest in new products, and expand their portfolio.
What does this all mean for you? How will it affect you as a policyholder? It may not seem important at first glance, but increasing foreign participation will result in increased competition, a wider product range, and greater professionalism. Increased competition will reduce malpractices like mis-selling and misleading policyholders. This move could ultimately change the Indian Insurance market.
An Empowered IRDAI This act is a significant step in strengthening IRDAI’s fist. This governing body will continue to be involved at the grass root level. It will appoint insurance agents and supervise their eligibility, capabilities, and professionalism.
This governing body also has the authority to regulate key areas such as expenses and investments, commissions payable agents, code, conduct, etc.
What does this mean for you? This increased power to IRDAI will be able to curb many malpractices currently prevalent in the Indian Insurance market. As a policyholder, your money will be more secure than ever.
Safety for consumers: The Indian Insurance market has never been as safe from a consumer’s point of view. This act provides security for those who are concerned about being misled or misled by an insurance agent. The new amendment imposes a penalty of INR 1 Crore to 25 Crore on Insurance Companies that mis-sell or misrepresent.
This means that companies will likely enforce strict norms on their agents, which will give you greater protection as a consumer.
The Bill will make it easier for policy holders to pay their nominees.
A significant amendment to the Bill was the reduction of the repudiation period for any policy. The repudiation period is the time within which a policy may be declared null and unenforceable due to incorrect information provided by its holder. To preserve the consumer’s interest, the new bill has reduced this time period to three years.
Insurance for Health: India’s health insurance has never been considered a separate vertical. This Insurance Bill addressed the issue. This amendment provides full definitions of “Health Insurance Business” and covers personal accidental coverage as well as accidental coverage while on vacation.
What does this all mean? It will certainly open the door to many solid insurance products that are related to your health.
Empowered Industries Council: Two Insurance industry councils, The Life Insurance Council (and the General Insurance Council) have been given the status as self-regulatory bodies by this Act. These two industry councils have the right to create bye-laws that govern their meetings and elections. The bodies have the right to levy and collect fees from their members.
What does this all mean? It means that the empowerment of these bodies has opened up communication channels between industry stakeholders.
Reinsurance in India now open: New amendments to the law have broadened the reinsurance market. Foreign investors can now insure a part of the Insurance Company with a 49% foreign investment limit.
What does this all mean? A re-insurer removes a significant risk from your insurance company. Re-insurance companies generally have a greater understanding of international insurance practices. This will allow reinsurance companies to gain knowledge and expertise from international players, which will make them more stable.
All these key points show that the Insurance Bill 2015 was strong and could meet most expectations.
