What to Expect in The First 100 Days if NDA is Voted to Power for a Third Time?

Election fever has gripped India, and people are eagerly waiting to see whether the incumbent government will return to power or a new alliance will form the government. Against this backdrop, we would like to bring you the developments related to insurance that occurred during the previous N.D.A. government and what we can expect from the N.D.A. government if it is voted into power again. First, we will discuss the highlights for 2014-2023 and then discuss the agenda for 2024-2029.

2014-19 Period:

Insurance Laws (Amendment) Bill 2015 was the first major action taken by the N.D.A. government in 2015, which paved the way for major reforms in the insurance industry in India. Some of the major highlights of the bill are discussed below:-

• Foreign direct investment in an Indian insurance company increased from 26% to 49%. This means foreign investors can take up to a 49% stake in an Indian insurance company while safeguarding Indian ownership and control. 
• Capital availability has been made easy for private insurance companies as they can raise capital through new and innovative instruments under the regulatory requirements set by IRDAI.
• Consumer welfare was also prioritized by increasing the fines to be levied upon insurance companies for misselling insurance plans. The new law has provisions for levying fines ranging from Rs.1 Crore to Rs.25 Crore for various violations that could be committed by insurance companies or their intermediaries, such as misselling and misrepresentation.
• The scope of the term ” health insurance business” has been extended to include travel and personal accident insurance. In addition, the capital requirements for the health insurance business were retained at Rs.100 Crore, thereby paving the way for the creation of stand-alone health insurance companies. 
• The law allows foreign reinsurers to set up their businesses in India to carry out reinsurance business. Since the FDI limit has been increased to 49%, foreign reinsurance players such as Llyod’s and its members can enter the Indian market by creating broking companies to serve Indian insurance companies. The amendment also prevents the possibility of ceding 100% of the risk to a reinsurer in India.

2019-24 Period:

• One of the key reforms undertaken in this period is the increase in the Foreign direct investment (FDI) limit for insurance companies in India. The Insurance (Amendment) Act 2021 aimed to increase the FDI limit from the then-existing 49% to 74% in Indian insurance companies. This paved the way for foreign control of Indian insurance companies, and subsequently, new and innovative insurance products were launched into the Indian markets. 
• In 2019, the Parliament passed the IRDAI (Insurance Intermediaries) Amendment Regulations, allowing 100% foreign investment in Intermediaries. This law paved the way for creating 100% foreign-owned intermediaries in India. 
• Insurance schemes such as Pradhan Mantri Vaya Vandana Yojana (PMVVY), a pension scheme for senior citizens, and other schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Pradhan Mantri Jan Arogya Yojana are also launched during this period. These schemes aim to provide insurance and pension coverage to an ignored section of society. 
• During this period, the spread of COVID-19 resulted in the creation of COVID-specific plans such as the Corona Kavach and Corona Rakshak policies.
• IRDAI has amended the “Use and File” regulations, allowing insurance companies first to use and then file the insurance products. 
• IRDAI has also launched the Bima trinity, which includes “Bima Sugam, “Bima Vistaar,” and “Bima Vahak.” We have discussed this in detail here.  

2024-29 Period:

• Officials from the Finance Ministry have disclosed that the Insurance Laws (Amendment) Bill 2024 is drafted and ready to be tabled in the Parliament and implemented regardless of the party in power. 
• The bill proposes a composite license to insurers. Under this, a single entity can carry out both life and non-life insurance businesses in India. Until now, entities that wish to enter life and non-life business are mandated to take 2 different licenses, thereby increasing their investment and manpower. Developed countries such as the U.S.A., U.K., Singapore, and Malaysia have already implemented the concept of composite licenses. India has a composite license for insurance brokers and not for insurance companies. 
• The new bill also allows insurance companies like banks to sell different financial products. Banks sell mutual funds, insurance, credit cards, foreign exchange currency, remittances, and other investment options. 
• The bill also proposes to exempt insurance companies from having a paid-up capital of Rs.100 Crores for life, general, and health insurance businesses and Rs.200 Crores for reinsurance businesses. 
• The new bill proposes a new classification of insurance companies. Until now, insurance companies were classified based on the products they offered, but the new bill proposes classification based on the size and scale of the business, class, or subclass of business.

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