The insurance bill passed in both houses in March 2015 is expected to have a profound impact on the Indian insurance industry. Much awaited and awaited, this amendment gave a bunch of benefits to both the insurance company and the policy holder. An increase in power to regulatory bodies, greater protection to policy holders and an increase in the level of foreign investment in the sector are some of the salient features of the insurance bill.
Listed here are some of Bill’s major attractions and how they can affect you:
Foreign investment increased: The new amendment allows up to 49% foreign investment in Indian insurance companies from now on. This increased capital flow is expected to revive all industries simultaneously. National players will now be able to invest in new products and expand their portfolio manifold.
What does this mean for you: How will it affect you as a policy holder? Well, at a glance this may not be of any importance, but foreign involvement means increased competition, wider product range and greater professionalism. Increased competition in the market will also reduce the ill-effects of mis-selling and misleading policy holders. Therefore, in the long run, this move can actually change the entire scenario of the Indian insurance market.
A strong IRDAI: The Act goes a long way in strengthening the fist of IRDAI. This governing body will now be involved at the ground level, such as appointing insurance agents and monitoring their eligibility, competence and professionalism.
In addition, this governing body now has the right to regulate the major areas of insurance companies such as expenditure, investment, commission payable to agents, code of conduct, etc.
What this means for you: This increased power of IRDAI is sure to cover many ill-practices prevalent in the insurance market in India. Therefore, your money as a policy holder will now be safer than before.
Consumer Protection: The Indian insurance market was never as safe as it is now from the consumers’ point of view. If you are worried about being misled by an insurance agent, this act will give you mental peace. In an attempt to cover up misdeeds, the new amendment imposes fines ranging from INR 1 crore to INR 25 crore on any insurance company that indulges in mis-selling and misrepresentation.
What this means for you: In view of this high penalty, companies are likely to enforce stringent criteria for their agents, which in turn will give you more protection as a consumer.
The bill will make the payment process easier for the nominees of any policy holder.
Another very important amendment the Bill has brought is to shorten the time frame for any policy. The repatriation time is the specific time period within which a policy can be declared null and void in the light of misinformation submitted by the policy holder. To keep the consumer interest intact, the new bill has been changed to 3 years this time.
health insurance: Health insurance in India never got a separate business status. But this insurance bill identified the problem and addressed it. The amendment defines “health insurance business” in full detail and includes personal contingency coverage and contingency coverage while traveling.
What this means: This step will definitely make a way for many strong health-related insurance products.
Strong Industry Council: Two Insurance Industry Councils, Life Insurance Council and General Insurance Council have now been given the status of self-regulatory bodies under this Act. Now, these two industry councils are entitled to implement by-laws for their meetings and elections. In addition, bodies may charge fees and collect them from their members.
What this means for you: The empowerment of these bodies has now opened up the modes of communication between industry stakeholders.
Opening of reinsurance business in India: The new amendment to the law has opened up the reinsurance clause to a large extent. With a 49% foreign investment cap, foreign investors can now insure a portion of the insurance company.
What this means for you: A re-insurer takes a major risk factor from your insurance company. Re-insurance companies are generally more knowledgeable about international insurance practices. Thus opening up the re-insurance possibilities would provide knowledge and expertise to international players and at the same time make insurance companies more stable.
With all these key points, the Insurance Bill, 2015 was strong and could actually meet most expectations.