The Lok Sabha passed a law to amend the general insurance business Act without a debate.
Objective of the bill:
It will allow the government to bring down its stake in State-owned general insurance companies.
It will generate required resources.
It will help public sector general insurers design innovative products.
It seeks to remove the mandatory requirement of the Central government holding not less than 51 percent of the equity capital in a specified insurer.
Benefits arising out the bill:
It will provide for greater private participation in public sector insurance companies.
It will enhance the penetration of the insurance sector.
It will provide social protection by securing the interests of the policyholders better.
It will contribute to faster pace of the economic growth.
Provisions of the Bill:
The bill will allow the government to bring down its stake in State-owned general insurance companies, generate required resources and help public sector general insurers design innovative products.
It allows the government to privatize state-run general insurance
It seeks to remove the mandatory requirement of the Central government holding not less than 51% of the equity capital in a specified insurer.
It also provides for cessation of application of the existing general insurance law to those insurers in which the government ceases to have control.
Control refers to the government’s right to appoint a majority of directors or to have the power to influence management or policy decisions.
It increases the liability of a director, who may not be a whole-time director, in case the insurance firm commits certain acts of omission which he was aware of or party to.
It seeks to include capital redemption and annuity certain within the general insurance business.