On February 20 2025, Hyderabad (Telangana) based Insurance Regulatory and Development Authority of India (IRDAI) has set up a 7-member committee to review and implement changes to the Insurance Act of 1938.
- This panel will be led by Dinesh Kumar Khara, the former Chairman of the Mumbai (Maharashtra) based State Bank of India (SBI).
- These changes are part of the government’s effort to improve the insurance sector and its reach, aiming for “Insurance for All by 2047.”
Committee Members:
The other members of the committee include:
i.Narayanan Srinivasa Kannan, the former Chief Executive Officer (CEO) of Mumbai (Maharashtra) based ICICI Prudential Life Insurance Company Limited (a joint venture between ICICI Bank Limited and Prudential Corporation Holdings Limited).
ii.Girish Radhakrishnan, the former Chairman and Managing Director (CMD) of Chennai (Tamil Nadu, TN) based United India Insurance Company Limited (UIICL).
iii.Rakesh Joshi, a former Member of the IRDAI.
iv.Saurav Sinha, a former Executive Director (ED) of the Reserve Bank of India (RBI).
v.Alok Misra, the Managing Director (MD) and CEO of Gurugram (Haryana) based Microfinance Institutions Network (MFIN).
vi.L Vishwanathan, a legal expert.
Key Points:
i.The Insurance Act, 1938 serves as the foundational legislation governing the insurance industry in India.
- It provides a comprehensive legal framework for the operation of insurance businesses, ensuring their financial stability and protecting policyholders’ interests.
ii.The committee, led by Dinesh Kumar Khara, is tasked with reviewing these proposed amendments and suggesting a framework for their implementation.
- The committee is expected to submit its report within 3 months.
iii.Based on its recommendations, the IRDAI will forward proposals to the Ministry of Finance (MoF), while the Department of Financial Services (DFS), MoF will draft a new bill for stakeholder feedback.
Proposed Amendments to the Insurance Act:
i.Increase in Foreign Direct Investment (FDI): The government plans to raise the FDI cap in the insurance sector from 74% to 100% aiming to attract more foreign investment, potentially leading to enhanced capital inflow and improved services in the Indian insurance market.
- This enhanced limit will be available for those companies which invest the entire premium in India.
Note: To increase the FDI limit in the insurance sector, the government will need to amend key legislations, including the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
ii.Composite License for Insurers: The proposed amendments seek to allow insurance companies to operate across different insurance segments (like life and general) under a single license, offering more flexibility and operational efficiency.
iii.Reduced Capital Requirements: The amendments propose lowering the minimum paid-up capital for insurance companies, encouraging more players to enter the market and boosting competition.
Note: As of January 2025, there are 25 life insurance companies and 34 non-life or general insurance firms in India.
About Insurance Regulatory and Development Authority of India (IRDAI):
IRDAI was established under the Insurance Regulatory and Development Authority Act, 1999. It is an autonomous body under the jurisdiction of the Ministry of Finance (MoF) responsible for regulating and developing the insurance and re-insurance industries in India.
Chairperson– Debasish Panda
Headquarters- Hyderabad, Telangana
Established- 1999
