On 18th March, 2021, Rajya Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill amends the Insurance Act, 1938. The Act provides the framework for working of insurance businesses and regulates the relationship between an insurer, its policyholders, its shareholders, and the regulator (the Insurance Regulatory and Development Authority of India).
The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control. However, such foreign investment may be subject to additional conditions as prescribed by the central government.
The Bill has omitted the Explanation under S. 27(7) of the Act. Section 27 of the Act provided the insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities. If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India. The Explanation provided that this will also apply to an insurer incorporated in India, in which at least: (i) 33% capital is owned by investors domiciled outside India, or (ii) 33% of the members of the governing body are domiciled outside India. The Bill removes this explanation.
*Tanvi Singh, Editorial Assistant has put this story together.