New Delhi: The country’s largest insurer LIC may take a call on the composite license clause after the passage of the Insurance Laws (Amendment) Bill in Parliament, sources said. As per the proposed Bill, an applicant may apply for registration of one or more classes/sub-classes of insurance business of any category or type of insurer. However, reinsurers are prohibited from seeking registration for any other class of insurance business. A composite license will allow insurers to undertake general and health insurance through a single entity.
Sources said LIC would take a call on composite license and other issues emanating out of the passage of the Bill in a comprehensive manner taking into consideration the Life Insurance Corporation Act, 1956. The Bill, with proposed amendments to the Insurance Act 1938 and Insurance Regulatory and Development Authority Act, 1999, is expected to be tabled in Parliament in the upcoming Budget session starting next month, sources said. (Also Read: LIC offering Rs 27 lakh for daughter’s marriage; You just have to invest Rs 3600– Check details here)
If the proposal for composite insurance registration is passed, there would be a change in solvency margin and capital requirement for these companies. The proposed amendments suggest that the minimum paid-up capital be specified by the Insurance Regulatory and Development Authority of India (IRDAI) considering the size and scale of operations, class or sub-class of insurance business, and the category or type of insurer. (Also Read: THIS Post Office Scheme offers Rs 35 lakh on maturity; check monthly investment, return calculator, policy terms)
Currently, the solvency ratio is pegged at 150 percent while paid-up capital is Rs 100 crore as per the existing law. The finance ministry has recently circulated for wider consultation the amendment in insurance law, including a reduction in the minimum capital requirement, with a view to enhancing insurance penetration, improving efficiency, and enabling product innovation and diversification.
The proposed amendments primarily focus on enhancing the promoting policyholders’ interests, improving returns to the policyholders, facilitating the entry of more players in the insurance market leading to economic growth and employment generation, enhancing efficiencies of the insurance industry – operational as well as financial and enabling ease of doing business.