Chandan Mitra, Head-Insurance, Parliamentary Committee discussed in detail the increase FDI limit in insurance to 49%. He informed that the Select Committee has suggested 49% as a composite cap of FDI, including Foreign Institutional Investors (FIIs) and Foreign Portfolio Investment (FPI). A fresh legislation and law of concern will be drafted by the government.
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The committee has decided to retain ownership and control in the hands of Indian shareholders. According to the bill, the power of control includes control of management, right to appoint a majority of directors, and make policy decisions related to the management rights, shareholding, voting agreements or shareholder agreements.
He elaborated that the health insurance capital has been increased from Rs. 50 crore to Rs. 100 crore to keep the non-serious players out of the health insurances sector. The main focus is on bringing somebody with required amount of capital for the industry. And, Rs. 50 crore will not be sufficient in case of large payouts.
Chandan Mitra talked about the big business of re-insurance and bringing it to India. He informed that the Lloyd’s of London is the main re-insurance company in the world. China and Singapore have already opened themselves to Lloyd’s but not India, as there was no law in India permitting foreign re-insurance business entities to enter into the country and do business. However, according to the new bill, Lloyd’s of London can enter India to start the re-insurance business that will subsequently increase the FDI flow.
He believes the recommendation of allowing one insurance agent to sell policies for life, general or health insurance will liberalize the entire insurance sector. This is to eliminate unnecessary restriction. Subsequently, it helps the insurance agent to have more number of customers.
On the discussion of getting the Insurance Bill passed, Chandan Mitra informed that only 4 of 15 members disagreed to the Bill. Thus, the committee has a clear majority that falls in the favor of the Bill. He believes the Bill will be passed smoothly in the Rajya Sabha as there has not been any serious opposition to it.
(Source: This article has been adapted from the article "Want to keep out non serious players from health insurance sector" that appeared on December 11, 2014 in economictimes.indiatimes.com.)
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