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There’s more to it than 49%
Where does the insurance sector stand today? What has the Insurance Bill, 2015 to offer? Will it bring Acche Din?

These and related issues, were deliberated at a conclave co-hosted by the Madras Management Association and CAMS Repository Services in Chennai.

First, the Bill increases the maximum permissible foreign investment in equity shares of an Indian insurance company to 49 per cent, up from 26 per cent set earlier. The investment would be under automatic route up to 26 per cent and will be under approval route thereafter. “This is likely to bring money flow of USD 2 billion in the near term and USD 10 billion in the medium term,” said V Manickam, Secretary General, Life Insurance Council.

Second, an Indian insurance company shall be under the ownership and control of Indian residents. This means that more than 50 per cent of the equity shares should be held by Indian residents. This provision was not there earlier, which meant that it was possible for offshore partners to have substantial control rights. 

While no one denies that the capital inflows will help, as D K Mehrotra, Chairman, CAMS Repository Services, asks: “is capital the only thing relevant? Isn’t technology, regulatory issues and innovation also important and will they see sea changes?  

Finally, will the benefit go to the customer?”

Three, Section 45 is set to change. Earlier, insurance companies could not repudiate a policy if it was more than two years old, except where a fraud is proved.  Now, they cannot repudiate a policy if it’s more than three years old, fraud or no fraud. Meaning, if your policy has been alive for three years, you are assured of settlement.

Four, partial assignment of policies is now possible. Thus, if you have a policy for Rs 10 lakh, you can assign Rs 2 lakh to a lender retaining the benefits of the balance Rs 8 lakh with you.

And five, insurance companies can collect premium in installments for motor and fire policies, in addition to the existing health policies. This is likely to be good for the customer.

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