Insurance Bill deferred - Daily News & Analysis
With the government finding support within and outside it wanting, the Insurance Amendment Bill, which was set to be tabled in Parliament on Thursday has been put on the backburner.
Finance minister Pranab Mukherjee, however, left a tantalising prospect of higher foreign direct investment or FDI in insurance by saying: "Overseas investment in India insurance companies is already at 26%, therefore cabinet felt no urgency to approve the Bill".
The 26% cap is in line with the recommendations made by the Parliament standing committee headed by BJP leader Yashwant Sinha.
The rationale was that the companies should look at raising capital from the domestic market instead of relying so heavily on foreign players. However, insurers don't seem enthused about this recommendation.
Said a senior industry official: "The deferment is quite disappointing for insurers. Also, if the FDI cap had been increased, it would have had helped in capital mobilisation and would have been a big help for the struggling industry."
The other recommendation that the industry is keenly watching is about the re-insurance sector to be opened to foreign players for branch operations.
If this is cleared, it would help foreign reinsurance companies such as Lloyds to freely operate in India. This will also make re-insurance pricing competitive, reducing the cost of Indian insurers.
Another key suggestion that has been made pertains to third-party liability in motor insurance. The committee believes this should be capped at `10 lakh in case of death or bodily injury. Currently, the third-party liability is unlimited.
The Insurance Law (Amendment) Bill was first tabled in 2008.
11 May, 2012
-
Source: http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGgFFCGSgHPZfa-sjUJGug-aBGoEA&url=http://www.dnaindia.com/money/report_insurance-bill-deferred_1687187
--
Manage subscription | Powered by rssforward.com
