The Insurance (Amendment) Bill, 2021

The Insurance (Amendment) Bill, 2021

Part of: GS Prelims and GS – III – FDI; Economy 

In news

• The Rajya Sabha passed the Insurance Amendment Bill, 2021 recently. 
• The Bill amends the Insurance Act, 1938. 
• It increases the maximum foreign investment allowed in an insurance company from 49% to 74%.

Key takeaways 

• The Act provides the framework for the functioning of insurance businesses and regulates the relationship between an insurer, its policyholders, its shareholders, and the regulator (the Insurance Regulatory and Development Authority of India).

• The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.
• The Bill also removes restrictions on ownership and control.
• Foreign investment may be subject to additional conditions as prescribed by the central government.

• The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities.
• If the insurer is incorporated or domiciled outside India, such assets must be held in India in trust and vested with trustees who must be residents of India.