Explained: What Is The Insurance Laws (Amendment) Bill, 2022 Which Will Be Introduced In Budget 2023

Less than a month is left for India's Finance Minister Nirmala Sitharaman to present the Union Budget 2023 on February 1.

While we'll all have to wait for the Budget 2023¡¯s announcements to know what¡¯s in store for the common man and various sectors of the economy, one of the certainties of the upcoming budget is the introduction of the Insurance Laws (Amendment) Bill, 2022. Its draft was released last month by the Ministry of Finance.

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The government is likely to introduce it in the budget session of 2023, which is expected to begin on January 31st, 2023.

One License For All

The Insurance Laws (Amendment) Bill, 2022, will pave the way for the issue of composite licences to insurers, officials said, as per ET report.

A composite license, which will allow insurers to undertake general and health insurance via a single entity, has been a key industry demand. The Insurance Laws (Amendment) Bill, 2022, proposes to remove the Rs 100 crore minimum paid-up equity capital requirement for carrying out life insurance, general insurance, and health insurance businesses as part of a significant revamp of the insurance framework.

"Our aim is to bring the legislation in the budget session. It, however, will depend on how swiftly we can incorporate suggestions and seek cabinet approval for the proposed legislation," said a senior official aware of the developments.

In December 2022, the finance ministry invited comments on amendments proposed to the Insurance Act, 1938, and the Insurance Regulatory and Development Authority Act, 1999. ¡°The proposed amendments primarily focus on enhancing the financial security of the policyholders, promoting the policyholders' interests, improving returns to the policyholders, and facilitating the entry of more players in the insurance market, leading to economic growth and employment generation," the ministry said while seeking comments from all stakeholders. The last date for sending comments was December 15th.

Another official said that since the proposed amendments have been made after extensive consultation with industry and the regulator, they don¡¯t expect any delays.

¡°Hopefully, the bill could be announced and approved during the budget session,¡± he said.

Also Read: Inclusion Of Mental Illness In Health Insurance Made Mandatory By IRDAI

What The Finance Ministry Has Said

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The Finance Ministry, while inviting comments, noted that the aim is to enhance the efficiencies of the insurance industry, both operationally and financially, and enable ease of doing business. The proposed amendments primarily focus on enhancing the promotion of policyholders' interests, improving returns to the policyholders, facilitating the entry of more players in the insurance market, leading to economic growth and employment generation, enhancing the efficiencies of the insurance industry, both operationally and financially, and enabling ease of doing business.

"The proposal includes various measures, such as opening up registration to various classes, sub-classes, and types of insurers with appropriate minimum capital requirements as specified by IRDAI, allowing insurers to provide services that are incidental or related to insurance business as well as distribution of other financial products as specified by IRDAI, enabling newer channels of distribution, providing for efficient use of capital and resources, etc.," it said.

This is being done in view of the changing needs of the insurance sector, the ministry said. A review of the legislative framework governing the sector has been done in consultation with the Insurance Regulatory and Development Authority of India and the industry, it said.