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New rules notified under the Insurance Act

Part of: GS Prelims and GS-III – Economy

In news

As per the new rules notified under the Insurance Act, Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members.

Key takeaways

This follows the recent amendments to enhance the foreign direct investment (FDI) limit in the insurance sector from 49% to 74%
However, a majority of board members, key management persons (KMP) need to be resident Indian citizens.
Also, at least one of the three top positions — the chairperson of the board, the MD and CEO – need to be resident Indian citizens.
This new norm will apply to all insurers, irrespective of the stake held by the foreign partner.
Further conditions have also been specified on the composition of the board for firms where foreign investors’ stake exceeds 49%.

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