Union Budget 2024: The Indian government is planning to introduce amendments to the Insurance Act, of 1938, to make insurance accessible to everyone by 2047 (Insurance for All). The proposed changes aim to achieve this by allowing more competition and innovation in the insurance market. This could lead to increased insurance penetration, job creation, and potentially better returns for policyholders.What is the Insurance Act 1938The Insurance Act of 1938 was enacted in India to regulate the business of insurance. It provides a comprehensive framework for the countrys registration, operation, and supervision of insurance companies. The Act establishes the Insurance Regulatory and Development Authority (IRDA) as the primary regulatory body responsible for overseeing the insurance sector. It outlines the requirements for obtaining a certificate of registration, sets rules for the conduct of the insurance business, and specifies provisions related to solvency margins, investments, and policyholder protection.What does the amendment changeOne key amendment involves introducing composite licenses. Currently, life insurers can only sell life insurance products, while general insurers offer non-life products like health or auto insurance. Composite licenses would allow insurers to sell both life and non-life products, similar to how banks can be universal banks, offering a wide range of financial products. This could increase customer convenience and potentially lead to more competitive pricing.Another proposed change is to ease capital requirements for insurance companies. This could allow smaller, specialized insurers to enter the market, focusing on areas like micro-insurance, agricultural insurance, or regional coverage. This would increase competition and potentially make insurance more accessible to underserved populations.The amendments are also expected to address regulations around investment and distribution. This could allow insurers to offer a wider range of financial products and potentially improve returns for policyholders. Additionally, streamlining the registration process for intermediaries could make it easier for people to sell insurance products.
